New Collateral-Free Credit for MSMEs Union Finance Minister Nirmala Sitharaman announced that Micro, Small, and Medium Enterprises (MSMEs) in India will soon have access to collateral-free loans of up to Rs 100 crore through a new credit assessment model developed by public sector banks. Speaking at the National MSME Cluster Outreach Programme in Bengaluru, she said that this initiative aims to address long-standing challenges faced by MSMEs in securing term loans and financing for plant and machinery. The plan, set to be introduced in an upcoming cabinet meeting, will provide government-backed credit guarantees for the first Rs 100 crore borrowed, requiring no collateral or third-party guarantee.
Improved Credit Assessment Model by Banks The Finance Minister also highlighted that public sector banks will create independent credit assessment models under this scheme. These models aim to improve access to credit by evaluating MSMEs based on streamlined criteria, enabling faster loan approvals and reducing dependency on traditional collateral-based lending. The model was announced in the recent budget and is expected to address grievances related to MSMEs’ limited access to financing.
Boost to E-Commerce and International Trade Sitharaman noted that e-commerce trade hubs, developed in partnership with the private sector, are also being established to facilitate international trade and export services for MSMEs. These trade hubs will be integrated within industrial clusters to provide MSMEs with easier access to global markets and to streamline export-related services.
