On May 13,
2020, the Prime Minister of India, Narendra Modi announced Rs 20 lakh crore
package to make our country ‘Self-Reliant’ or ‘Aatmanirbhar’ to fight against
the battle caused by Coronavirus outbreak.
These 20
Lakh Crore package announced for the small
businesses, power companies, shadow banks, and realtors that face a major
economic downfall. In the first tranche of relief package, there are many
benefits provided to the MSMEs, which covers Rs 3 Lakh Crore collateral-free
loans, Rs 50,000 crores to equity infusion, Rs 20,000 Crore subordinate debts,
the revised definition of MSME, e-linkage to the market, and global tender
disallowed up to Rs 200 Crore.
In the
following paragraphs, we will be discussing how the 20 Lakh Crore package will
benefit the MSME sector to mitigate the impact of this global pandemic that led
to devastating effects throughout the world.
1.
Collateral free Automatic Loans for Business/factory Owners: This is an emergency credit line MSME
loan that is provided by banks and MBFCs. All the MSMEs that meet the
eligibility criteria are liable to avail MSME loan. However, there are some
strict guidelines also like the borrower must have outstanding less than Rs 25
Crore, and the company turnover is less than Rs 100 Crore. You have to pay off
the loan in the next 4 years and 12 months moratorium period on principal
repayment.
2.
Subordinate debts for MSMEs: The government of India has also announced Rs 20,000 Crores
subordinate debts for stressed MSMEs. The assistance is provided to MSME
who is struggling with an equity problem. This scheme will help up to 2 Lakh
MSMEs, but it will only be offered to the borrowers once they met their
previous secured credits.
3.
Equity Infusion for MSMEs: Another benefit offered to the MSME is Rs 50,000 equity
infusion, which is done through funds of funds. It is a strategy to invest in
different other types of funds. This will help the MSMEs to expand their
business and listed in the stock exchange market.
For more
information about the MSME, and loan that is offered by the government, get in
touch with the experienced professional of Consult Avenue.
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