LOAN SCHEME FOR MSME DURING COVID-19

Rescuing the MSME sector during this pandemic in one of the top priorities of the Government right now. Given the lockdown declared by the government to decrease the Covid-19 damage may not be healthy for the MSME sectors especially when the numbers of the sectors are vast and they essentially form the backbone of Indian economy.

What are the relief measures announced by RBI to help the MSME sector?

In the recent meeting held by the minister Nitin Gadkari for battling Covid-19 he stated that the RBI has announced relief measures recently and the minister has asked to ensure that the benefits of these measures reach MSME once the counting goes into the recovery mode. RBI Governor Shaktikanta Das announced last month that all the term loans,retail and crop loans and working capital payments will be covered by the three month moratorium.

RBI has announced a targeted long term repo operation of Rs.50,000 crore and has lowered the reverse repo rate by 25 basis points to 3.5% for small and medium sized non banking financial companies ( NBFCs) and MFIs ( Micro Finance Institution) with the aim to facilitate more flow of funds to these MSMEs. Finance Minister, Nirmala Sitharaman said that the amount will be increased as needed. In this case it is to be noted that RBI has made it mandatory for NBFCs to invest the funds within a month of availing the loans from RBI. The reverse repo rate will lead the bank to lend it to MSMEs rather than depositing it with RBI.

The RBI Government, Shaktikanta Das has also quoted that the global trade is expected to decline up to 32 percent in 2020as it will take time for China to recover from the impact so that they can open their border. India needs to be specific with it's policies so that it maintains the supply of essential commodities amid this lockdown. RBI has also prohibited banks from moving any further dividends from profits for 2019-20 as a means to conserve capital.

What are the various main schemes provided by public sector banks?

After the package announced by RBI. SBI has also taken steps as a part of Covid-19 relief measures to extend the total repayment period by 3 months over the original repayment period.

SBI has also announced to disburse Rs. 700 crore to MSMEs situated in Mumbai by the end of June to get over the liquidity crisis caused due to Covid-19. Suresh Nair , deputy general manager ( SMEs and Financial inclusion) at SBI has quoted that SBI is lying to boost credit flow to the MSMEs by extending emergency loans and reassessing their working capital limit. They are expecting to lend 700 crore to MSMEs in Mumbai,Thane,Palghar and Raigad.

SIDBI has launched two schemes SAFE scheme and SAFE PLUS to support MSMEs for battling Covid-19. Under the scheme loans are going extended at a low rate of interest of 5% within 48 hours. SAFE PLUS has been especially created to provide emergency working capital with the same rate of 5%. Similarly various public sector banks have introduced emergency measures such as credit facilities to help these MSME borrowers.