Modi Government Promises MSMEs Loans Up To Rs 1 Crore, In 59 Minutes
The Indian government announced the full launch of a new portal that helps micro, small and medium enterprises to avail credit within an hour.
Small businesses can use the ‘59-minute’ portal to avail loans of up to Rs 1 crore, Prime Minister Narendra Modi said at an event in New Delhi. Small enterprises registered under the goods and services tax will also get a 2 percent tax rebate on incremental loans of up to Rs 1 crore, Modi said.
The project was implemented on a pilot basis after it was approved at the annual review meeting of public sector banks. Since then, more than 72,000 loans worth over Rs 23,852 crore have been sanctioned, Modi’s presentation showed.
The portal is set up by the Small Industries Development Bank of India. MSMEs can register and apply for a loan. Their application goes to two or three banks with the aim to get them best possible interest rates following which it receives an in-principle approval. Most of the public sector banks are on board the portal.
This is part of the Modi administration’s outreach programme to strengthen the country’s MSME sector and ensuring ease of credit availability for them. The goods and services tax council had also established a panel of finance ministers to look into the issues that the country’s small businesses were facing. “Small businesses should get easier access to loans without having to frequently visit bank branches, at a cheaper interest rate,” Modi said. “That’s the first requirement for any business.”
Modi added that now public sector enterprises will have to buy 25 percent of their inputs from the MSME sector, compared with 20 percent earlier. The government will also allocate up to Rs 6,000 crore to develop technology centres for small business.
The government will also ease procedures for MSMEs to do business. Modi said that small businesses will now only have to file one return annually under eight labour laws. He said inspection will be technology-based and the report will be submitted on the portal within 48 hours.
The prime minister unveiled 12 initiatives for MSMEs, which he called “Diwali gifts”. They are:
- Loans for MSMEs up to Rs 1 crore can be granted in 59 minutes, which can also be availed through goods and services tax portal.
- A 2 percent interest subvention will be given on incremental and new loans to GST-registered MSMEs. For exporters who receive loans in pre- and post-shipment period, an increase in interest rebate has been given from 3-5 percent.
- All public-sector companies and corporates with turnover exceeding Rs 500 crore will have to mandatorily register on Trade Receivables Electronic Discounting System portal. This will improve the cash cycle for MSMEs as it will enable entrepreneurs to access credit from banks, based on their upcoming receivables.
- Public-sector undertakings will have to buy their 25 percent of their inputs from MSMEs from 20 percent earlier.
- Of the 25 percent, 3 percent of procurement will have to done by women entrepreneurs or women-led MSMEs.
- All central public sector enterprises will have to come on board of Government e-Marketplace so that they can procure goods from MSMEs listed on the portal.
- Technology upgradation support will be given to MSMEs. About 20 technological centres will be made as hubs and 100 centres as tool rooms will be created at the cost of Rs 6,000 crore.
- Clusters will be created for pharma MSME companies so that they can reach customers directly. About 70 percent of the cost for creating these clusters will be borne by the central government.
- MSMEs will have to file only one return under eight labour laws and 10 central rules against two returns earlier.
- Inspection would be done based on computerised random allotment and report of inspection will have to be submitted within 48 hours on the reporting portal. This will free MSMEs from Inspector Raj (regime), Modi said.
- Process of environmental clearance has been simplified, and MSME will require only one approval for “environmental clearance” and “consent to establish” under Air and Water Act.
- Ordinance has been approved for simplifying levy of penalty for minor offences under Companies Act. This will avoid unnecessary harassment to small business owners, and they won’t have to approach courts, but can correct minor violations through simple procedures.