Govt doubles credit guarantee limit for small businesses to Rs 2 crore, to also cover loan given by NBFCs

Source: www.dnaindia.com - Saturday, December 31, 2016
 To give a boost to the small entrepreneurs and job creation, the government on Saturday doubled the credit guarantee limit for small and medium businesses to Rs 2 crore to help them tide over the liquidity problems. Addressing the nation on the eve of the new year, Prime Minister Narendra Modi said that just like the agriculture sector, the micro, small and medium enterprises (MSME) is vital for the economy. He said that the government has taken certain decisions in the interest of small and medium businesses, which will also boost employment. "Government underwrites loans given by banks to small businesses through a trust. So far, loans were covered upto one crore rupees. This limit is now being enhanced to Rs 2 crore," he said while addressing the nation during the eve of the New Year. Earlier, the scheme only covered bank loans. But now, he said, "it will cover loans given by NBFCs (non-banking financial companies) as well". This decision will enable better access to credit for small shop-owners and small enterprises, the Prime Minister said, adding banks and NBFCs "will not" levy high interest on these loans, as the government is bearing the cost of underwriting them. MSME sector, which provides bulk of employment, accounts for 45% of India's manufacturing; 40% of exports and nearly 8% to the country's GDP. He said that the government has also asked banks to raise the credit limit for small industry from 20% of turnover to 2

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