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FM Sitharaman announces a new collateral-free term loans for MSMEs to boost manufacturing. Learn about the benefits and key details of this initiative.
Collateral-Free Term Loans: A Game Changer for MSMEs
Union Finance Minister Nirmala Sitharaman revealed a new collateral-free term loan scheme aimed at boosting micro, small, and medium enterprises (MSMEs). Addressing the National MSME Cluster Outreach Programme in Bengaluru, she said the scheme would be placed before the Cabinet soon. This scheme will provide term loans for modernizing plant and machinery, a necessity for MSMEs to enhance manufacturing capabilities.
Key Features of the Proposed MSME Loan Scheme
The Emergency Credit Line Guarantee Scheme (ECLGS), which provided ₹3.68 lakh crore in guarantees to over 1.19 crore borrowers by December 2023, saved millions of MSMEs during the pandemic. However, accessing term loans has been a challenge. The new scheme promises loans up to ₹100 crore without collateral or third-party guarantees. This is part of the government’s comprehensive package for MSMEs, focusing on finance, regulatory reforms, and technological support, as highlighted in the budget proposals.