New Delhi: Prime Minister Narendra Modi on Friday launched a national effort to make finance available to small businesses swiftly and without hassle and to develop their market at a time many are complaining of a liquidity crunch.
The ‘micro, small and medium enterprise (MSME) support and outreach’ programme seeks to grant quick access to credit at attractive terms. Loan requests for up to Rs 1 crore from small businesses will be approved in principle in 59 minutes. Those businesses which are registered for goods and services tax (GST) will get a 2% subsidy on interest. Exporters will get a 5% interest rate subvention, up from 3% now, on pre- and post-shipment credit.
To make sure the benefits reach small businesses, union ministers will visit 100 aspirational districts and help small businesses.
Modi said banks will process the loans by analyzing the information shared by the loan seeker in their goods and service tax (GST) return, income tax return, and the cash flow related information already available with the bank. “Even while you file your GST return, the tax portal will ask if you need a loan,” said Modi.
The Prime Minister also announced measures to ensure that small businesses get credit based on trade receivables. He urged all state-owned enterprises to be part of an electronic platform called Trade Receivables Discounting System (TReDS) where small suppliers can access credit based on trade receivables. Modi also said that the government has decided to increase the minimum procurement that state-run companies have to make from small businesses to 25% up from 20% now.