MSMEs look for extension of credit guarantee scheme, interest subvention coverage

 With people waiting anxiously for the upcoming post-pandemic budget, and waiting to understand the measures to be rolled out towards accelerating full recovery of key sectors, businesses expect further relief to their working capital crisis.

MSMEs, which were allocated Rs 3.7 lakh crore of the Atmanirbhar package last year by the government, are seeking an extra boost to the credit side of their requirements to get back in the pre-Covid shape as soon as possible.

The government had already extended the Emergency Credit Line Guarantee Scheme (ECLGS) twice from the scheduled timeline till October 2020 to November and further till March 31, 2021, with the launch of ECLGS 2.0 tweaking the criteria around eligibility, turnover limit, moratorium, and repayment window to pique interest among potential borrowers. The government had also expanded the scope of the scheme to extend coverage beyond MSMEs and Mudra loan borrowers to individual loans for business purposes.

Interest subvention scheme, which offers interest relief to MSMEs of 2 per cent per annum on their outstanding fresh or incremental term loan and working capital loans, is another critical area where small businesses would be happy to see an extension. The scheme was extended till March 31, 2021, however, its coverage is limited to the loans to the extent of Rs 1 crore.

To help MSMEs with their working capital requirement, the government has been urging small businesses with zero on-boarding fee to register on the TReDS platforms including Invoicemart, m1xchange and RXIL.

The government had waived the on-boarding fee of Rs 10,000 on TReDS platforms in September last year till March 2021 and had also integrated the new portal for registration of MSMEs, Udyam Registration with TReDS and government e-commerce platform GeM for seamless transactions.