Centre may tweak credit guarantee fund norms to help MSMEs

Currently, small businesses can get loans up to Rs 50 lakh; with tweaking they'll get up to Rs 2 cr

The centre may soon tweak the norms of Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme to favour small and medium enterprises (MSE) in the country.

During an interaction with the Bihar Industries Association (BIA), Minister of State for Finance Arjun Ram Meghwal agreed to revisit the norms of the scheme, so that small businesses will be abloe to avail financial assistance up to Rs 2 crore. 

"MSME sector is our focus. On December 31, the Prime Minister announced that the CGTMSE limit would be raised. We want to provide our MSEs all the facilities and remove all hurdles. This issue will be discussed at length after the Budget. We are ready to take measures to protect our small and medium entrepreneurs," Meghwal said.

The minister also responded positively to suggestions to change the provisions of the MUDRA scheme to benefit the technology-based start-ups. "It is a good suggestion. We will discuss with our officials and trade bodies after the budget," the minister added. Currently, banks are not providing loans to start-ups in Bihar due to the lack of a clear-cut policy for financing such enterprises.

According to the trade bodies in the state, industrial units are getting loans up to Rs 50 lakh under this scheme because of an amendment added in March 2015.

"Under the CGTMSE scheme, 75 per cent of the risk on loans up to Rs 50 lakh is covered. However, after the amendment, the risk coverage for loans above Rs 50 lakh has been reduced to 60 per cent. Therefore, banks are reluctant to provide assistance beyond Rs 50 lakh. This has created a major problem for small-scale industries in the state," said BIA member Sanjay Goyenka.