How the Government Will Help MSME Bad Loans

ECGC's NIRVIK scheme would help exporters in lending process and exercise restraint in premium revenue for MSME
How the Government Will Help MSME Bad Loans
Image credit: PIB

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Correspondent, Entrepreneur India
2 min read

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Recent data suggests bad loans in the MSME sector have surged from (INR) 7,290 in the first quarter of fiscal year 2018-19 to (INR) 8,974 crore in the same quarter of fiscal year 2019-20, which indicates that Non Performing Assets NPAs in the MSME sector showed a sharp 23 per cent rise in just a year. For the massive slump in MSMEs’ records, bankers specified economic slowdown as its reason. 

On Monday, Minister of Commerce and Industry and Railways Piyush Goyal revealed the details regarding Export Credit Insurance Scheme (ECIS) by Export Credit Guarantee Corporation of India ECGC named ‘NIRVIK’

According to the media reports, Nirvik scheme is aimed to make loans easier to access for MSMEs and exporters. It is planned to compose Indian exports competitive and benefit MSME in several ways. 

How can it benefit MSME? 

As there is around 23 per cent  rise in MSME bad loans in the current quarter, government has been shaping the economic structure with an eye to stabilize the loan framework of the enterprises.

Here are the ways in which ‘NIRVIK’ would benefit MSMEs

Revised Insurance Cover 

Eyeing capital and risk optimization, the government has decided to enhance insurance cover up to 90 per cent  , which will help in transpiring banks in enhancing the export credit lending to MSMEs along with optimal pricing. 

ECIS- Plunged Insurance Cost, Raised Insurance Cover 

Through ECIS (Export Credit Insurance Scheme), concerned bodies have made it easy for MSME by reducing the insurance costs for several small enterprises` and increasing the insurance cover amount. 

Tax Reimbursement

Tax reimbursement is also a beneficial factor to be counted amongst the advantages that MSME receives through NIRVIK. Tax reimbursements would hike the capital count of enterprises resulting in the accretion of organization’s total profit. Nirvik scheme has infiltrated into the government’s working sphere with the abundance of conviction to bring downturn in MSMEs to a screeching halt.  

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