Package for micro and small enterprises gets nod

The Union Cabinet on Wednesday approved increasing the corpus of the Credit Guarantee Trust Fund to Rs 7,500 crore from Rs 2,500 crore, to enable it to provide guarantee on loans up to Rs 2 crore taken by micro and small enterprises.

In his address to the nation on December 31, Prime Minister Narendra Modi announced doubling of the credit guarantee on loans taken by small and medium enterprises to Rs 2 crore and enhancing their cash credit limits. Apart from bank loans already covered by the Trust, credit from non banking finance companies will also be covered under the scheme. The Cabinet gave its approval to these decisions on Wednesday.

Coverage of the credit guarantee scheme for loans being extended to micro and small enterprises by NBFCs has also been increased. “As the scheme provides credit without collateral and third-party guarantee, the start-ups would be encouraged to set up enterprises based on innovation and new ideas. Every operation is online and therefore, the system ensures public accountability,” the government said in a statement.