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Also, more funds for Mudra loans, aimed at small businesses, are on the anvil, government sources told TOI.
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the Finance The ministry has put forward a proposal for the cabinet to guarantee new working capital limits to small units through the National Credit Guarantee Trust Company so that small businesses do not lack working capital. Currently, bank exposure to more than 6 billion micro, small and medium-sized enterprises (MSMEs) is estimated at around 15 crore, according to sources.
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On Tuesday, the finance ministry said that between March 20 and May 8, state lenders contacted 97% of borrowers eligible for emergency lines of credit and working capital improvements and loans in the amount of Rs 65,879 crore. But funding is seen as inadequate even to pay salaries and other fees as sales have stopped and payments from large companies and government departments are behind schedule, something that will be pushed again by the ministries of finance and MSMEs.
The additional working capital is expected to help banks lend more to provide funds to MSMEs amid expectations that the finance ministry will push the Reserve Bank of India to extend the loan moratorium beyond the current three-month period so that companies are not pressured to reimburse fees at a time when liquidity is already low in the absence of sales.
In addition to helping them overcome the immediate currency crisis, an announcement about a new definition of MSMEs is also expected to allow them to expand their scale. In addition, there are indications that government contracts of up to a specific value will be awarded to Indian companies. Furthermore, the compulsory acquisition of micro and small companies is expected to be strictly controlled.
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