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Indianomics: Govt's credit guarantee scheme for MSMEs underutilised; experts weigh in

Updated : October 30, 2020 01:25 PM IST

One of the big schemes announced post COVID-19 to the help the MSME sector was the credit guarantee scheme. According to the scheme, MSMEs with under Rs 25 crore loan outstanding, were to be given loans up to 20 percent i.e. up to Rs 5 crore which the government would fully guarantee.

The government provided funds to guarantee Rs 3 lakh crore of such loans. As of this week, only Rs 1.93 lakh crore has been sanctioned and Rs 1.45 lakh crore has been disbursed.

The government however increased the limit from Rs 25 crore to Rs 50 crore outstanding. It has also included MSMEs with revenues or size up to Rs 250 crore and even personal loans. However, disbursals still are less than half of total amount of the funds guaranteed.

Is this a lack of demand issue? Is there banker risk aversion that is responsible? Lack of awareness? To discuss all that CNBC-TV18’s Latha Venkatesh spoke to V Satya Venkata Rao, the Deputy Managing Director of SIDBI; Sanjay Agarwal, Senior Director at Care Ratings; Chandrakant Salunkhe, the Founder & President of the SME Chamber of India; and Dr. Ram Jass Yadav, the Chief General Manager of Retail Assets & MSME at Bank of Baroda.

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