Shri Kalraj Mishra said that the package for MSME announced by Prime Minister has met the long term demand of the MSME for increasing credit guarantee limit from Rs. 1 crore to Rs.2 crore. He said this in a letter thanking Prime Minister for the MSME package announced by him in the speech on the eve of New Year.

 

Shri Mishra said that it will be for the first time that the credit guarantee will also be extended to Non Banking Financial Companies which provides loans to Micro Small Enterprises. The package envisages that banks and NBFCs would charge low interest rate on these loans because Government is bearing a substantial part of guarantee cost. Micro and Small Enterprises have been facing liquidity and credit constraints in the last 2 months. Increase of credit limit from 20% of project annual turnover to 25% would substantially increase available credit to small industry by 25%. He also stated that as per announcement working capital loans for Micro and Small Enterprises would be increased from 20% of the project annual turnover to 30% on the digital component of the turnover. This would incentivize business to shift to digital payments systems.

 

Additionally Reserve Bank of India extended the period of the system 60 days to 90 days beyond what is applicable for the banks and financial institutions for recognition of a loan account of MSMEs as not being NPA or substandard for loans smaller than Rs. 1 crore. This measure would provide relief of Micro and Small Enterprises in repayment of interest on working capital loans. RBI has already advised banks on 29 December 2016 to provide additional working capital limit to Micro and Small Enterprises borrowers to overcome temporary difficulties consequent upon withdrawal of legal tender status of Rs. 500 and Rs. 1000 denomination notes. A few days back Government has also announced that presenting income tax for small business up to turnover Rs. 2 crore would be calculated at 6% on income from digital transaction in place of 8% otherwise. This would reduce income tax liability on such transaction by 25%. Subsequent to the announcement of MSME package by the Prime Minister positive feedbacks are received from the MSME sector.

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AK

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