Finance Ministry's New Policies to Boost MSME Funding Access by Up to INR 100 Crore The Reserve Bank of India (RBI) recently reported a 13.3 per cent year-on-year increase in lending to micro and small enterprises, with medium-sized enterprises witnessing a 17.2 per cent growth.
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India's Ministry of Finance is considering measures to enhance access to funding for Micro, Small, and Medium Enterprises (MSMEs). This initiative aims to provide the sector with critical working capital and strengthen job creation, aligning with the government's priority to support the MSME landscape, which forms the backbone of India's economy.
"The government aims to improve fund access for MSMEs, with banks being urged to back this initiative," a senior official shared with Business Today TV. This upcoming policy is expected to operate differently from the credit guarantee scheme unveiled in the Union Budget, which specifically targets MSMEs in the manufacturing sector by allowing them to secure equipment and machinery loans without collateral or third-party guarantees. This credit guarantee program, covering loans of up to INR 100 crore, is in the final stages of inter-ministerial review and is anticipated to launch shortly.
The Reserve Bank of India (RBI) recently reported a 13.3 per cent year-on-year increase in lending to micro and small enterprises, with medium-sized enterprises witnessing a 17.2 per cent growth. However, the data from FY23-24 highlighted a deceleration, with growth rates for micro-small and medium enterprises at 10.2 per cent and 9.7 per cent, respectively—significantly lower than the impressive 28.3 per cent and 36.8 per cent growth seen in 2022-23.
To address the financing challenges faced by MSMEs, Finance Minister Nirmala Sitharaman introduced a support mechanism in the recent Budget, designed to help MSMEs in the 'special mention account' (SMA) phase. This measure aims to ensure continuous access to credit, preventing these enterprises from falling into non-performing asset (NPA) status.
Furthering this commitment, Finance Minister Sitharaman will meet MSME representatives in Bengaluru on November 9, where she will inaugurate several new branches of the Small Industries Development Bank of India (SIDBI).
This potential financial boost, alongside policy support, represents a crucial step in equipping India's MSMEs with the resources needed for resilience and growth in the evolving economic landscape.
