Rs 3 lakh crore collateral-free automatic loans for businesses, including MSMEs: Sitharaman

Borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover eligible will get this collateral-free credit, along with credit guarantee to banks.

Union finance minister Nirmala Sitharaman said on Wednesday businesses including MSMEs and SMEs will get a Rs 3 lakh crore collateral-free automatic loans to meet operational liabilities built up, buy raw material and restart business.

Union Finance Minister Nirmala Sitharaman(Screen Grab)

Nirmala Sitharaman was addressing a press conference to give the details of the Rs 20 lakh crore economic stimulus package announced by Prime Minister Narendra Modi as day earlier.

She said the emergency credit line to businesses and MSMEs from banks and NBFCs up to 20% of entire outstanding credit as on February 29, 2020.

Borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover eligible will get this collateral-free credit, along with credit guarantee to banks.

These loans to have four year tenor with a moratorium of 12 months on principal repayment. The interest to be capped 100% credit guarantee cover to banks and NBFCs on principal and interest scheme can be availed till October 31.

She said there won’t be any guarantee fee or fresh collateral and that 45 lakh units can resume business activity and safeguard jobs.

Nirmala Sitharaman said the Rs 20 lakh crore package is essentially to spur growth and build a self-reliant India.

“This package is focussed on five pillars of economy, infrastructure, technology-driven systems, demography and demand. Accordingly, the focus will be what can be identified as factors of production - land, labour, liquidity and law,” she said.

The finance minister said the announcements about the economic package is in line with PM Modi’s vision. “In his address, the Prime Minister didn’t mean isolated India, but a confident India,” said Sitharaman.