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MSME Minister Launches Rs 20 lakh Scheme Under CGTMSE For GST-Exempted Micro Units.

MSME Minister Narayan Rane launched a special scheme for informal micro enterprises (IMEs), exempted from the Goods and Services Tax (GST) regime. This scheme enables IMEs to access collateral-free loans up to Rs 20 lakh under the government’s Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

Objective of the Scheme

The scheme, titled ‘Special Provision for Informal Micro Enterprises under Credit Guarantee Scheme,’ aims to provide credit support to micro or nano enterprises. It seeks to moderate the credit risk perception associated with lending to IMEs, as stated by the MSME Ministry.

Guarantee Cover and Lending Provisions

According to a circular issued by CGTMSE to all its member lending institutions (MLIs) on February 14, the scheme offers up to 85% guarantee cover for unsecured loans up to Rs 20 lakh to IMEs registered on the Udyam portal. This move is expected to encourage MLIs to extend more loans, thereby increasing credit flow to IMEs in the MSE sector.

CGTMSE Milestones

Established in 2000, CGTMSE has recently achieved significant milestones. It surpassed Rs 1.50 lakh crore worth of guaranteed amount in the current financial year, marking a sharp increase of 50% compared to the previous fiscal year’s figure of Rs 1.04 lakh crore, according to the MSME Ministry.

Budgetary Support and Financial Inclusions

In her budget speech for 2023, Finance Minister Nirmala Sitharaman announced a Rs 9,000 crore fund infusion in the CGTMSE corpus. This infusion aims to facilitate additional collateral-free credit of Rs 2 lakh crore to MSMEs and reduce the cost of credit by 1%.

Udyam Portal and Formalization Initiatives

As of the latest data, nearly 1.41 crore IMEs are registered on the Udyam portal out of the total 3.74 crore registered MSMEs. The government’s MSME formalization project includes initiatives such as the Udyam Assist Platform (UAP), launched in January last year, to enable IMEs to register with the Udyam portal and access priority sector lending (PSL) benefits.

Seamless Integration with Digital Ecosystem

The UAP, initially discussed in a report by the standing committee on finance headed by Jayant Sinha, aims to seamlessly connect IMEs to the fast-emerging digital ecosystem. This includes integration with platforms like Government e-Marketplace (GeM), Trade Receivables Discounting System (TReDS), and other digital marketplaces, facilitating their participation in the digital economy.

Source from: https://currentaffairs.adda247.com/msme-minister-narayan-rane-launches-rs-20-lakh-scheme-under-cgtmse-for-gst-exempted-micro-units/

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