To Encourage Employment Creation, Nitin Gadkari Plans an MSME Credit Scheme

MSME ministry is working on a special credit scheme for small businesses, focused on ST/SC

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The Micro, Small and Medium Enterprises (MSMEs) contribute 29 per cent to India's GDP and generate employment opportunities for over 100 million people. If the CII survey is to be believed the sector has created the most number of jobs in the past four years. However, it has the potential to employee more, especially from the lower-income groups.


Small businesses are always in need of labour workers to carry out measly operations. Lack of technological advancements has left the sector in advantage for creating job opportunities for unskilled individuals, who would otherwise be jobless. As corporations automate most of their operational practices, the onus to employee the tribal population falls over the backbone of Indian economy – MSMEs.

The dilemma lies in the financials as MSMEs find it hard to acquire loans from financial institutions. Government and NBFCs have been providing required support to fight this credit crunch. In the new initiative, the government is working out on a new credit scheme for MSMEs to encourage job creation, with special focus on the scheduled castes and tribes.

MSME Credit Scheme

The Minister of MSMEs, Nitin Gadkari while answering questions on the sector's credit availability in Rajya Sabha stated that under the scheme the credit limits of World Bank and Asian Development Bank will be used to provide loans to small and medium enterprises that will help provide employment opportunities to the poor.

With the aim of bringing MSME's GDP contribution to 50 per cent, "The government is working on bringing a new scheme that would provide employment opportunities as talks are on with the World Bank and Asian Development Bank and their credit limits would be used to provide credit to SMEs," Gadkari told the parliament.

The policy would reportedly be operational within a month as "the government was evolving such a scheme that would lay emphasis on creating more employment opportunities, with special focus on scheduled castes and scheduled tribes. Emphasis will also be laid on tribals and rural agriculture-related activities," Gadkari said.

Loans in 59 Minutes

Among the biggest steps taken for MSMEs, the government announced "59 minute' loan scheme in 2018 promising loans of up to INR 1 crore from public sector banks (PSBs) through an online lending marketplace called "psbloanin59minutes'. The portal approves a loan in 59 minutes and connects the borrower to the bank branch for sanction and disbursal.

Gadkari also informed the House that a portal has been launched by a public limited company, 'Online PSB loans Ltd' in which SIDBI and other public sector banks hold majority stake. The portal initially provided in-principle approval of loans for amounts up to INR 1 crore but recently some banks have started considering loans of up to Rs 5 crore.

The same portal has tied up with 20 public sector banks, four private sector banks and a cooperative bank and is helpful in integrating the income tax, GST and bank accounts of those seeking loans that lend credibility to the credit giving system.

"A total of 55,635 cases with total loans of INR 16,174 crore have been sanctioned principally under the portal as on March 31, 2019 and a total of INR 12,683 crore has been financially sanctioned in 45,216 cases. So far, a total of Rs 4,746 crore has been disbursed in 20,303 cases," Gadkari informed Rajya Sabha.