1 Crore Loan in 59 Minutes: Modi’s Diwali Gift to MSMEs

Loan Scheme for MSME
MSMEs are significant economically for they are big-time employers in the country
Modi Diwali Gift - Loan Scheme for MSME
Good news for small businesses! Thanks to the PM Modi’s new announcement, now there’s a hassle-free road to avail up to Rs 1 crore loan in 59 minutes for medium, small, and micro enterprises. And what’s more! the eligible organisations, which are registered under the goods and services tax, will now be eligible for a 2% tax concession on incremental loans reaching up to Rs 1 crore.

Modi’s Special Diwali Gift – Loan Scheme for MSME

What Are MSME Really?

MSME stands for Micro, Small, and Medium Enterprises. These are considered small-sized businesses in terms of the investment. They are significant economically for they are big-time employers in the country. Secondly, roughly 40% of the industrial output is made by these enterprises annually.

For a Micro Enterprise: Turnover is less than or equal to Rs. 5 crores annually

For a Small Enterprise: Turnover is more than Rs. 5 crores and less than Rs. 75 crore annually

For a Medium Enterprise: Turnover is more than Rs. 75 crore and less than Rs. 250 crore annually

What’s the Procedure?

SIDBI (Small Industries Development Bank of India) has set up a portal at https://www.psbloansin59minutes.com/home. All an eligible enterprise has to do is to register there and apply for the loan. Their applications will be circulated to 2-3 banks to get the best interest rates possible. This is followed by receiving of an approval. Almost all the public sector banks are participating in this.

What is the Main Purpose?

The government’s main purpose in this programme is to strengthen the MSME sector of India.  It also aims to cut the long procedure short for them in getting the loans. Modi stated in a statement “Small businesses should get easier access to loans without having to frequently visit bank branches, at a cheaper interest rate. That’s the first requirement for any business.” A finance ministers’ panel has also been established which will resolve the issues small businesses have to deal with.

In addition, the new announcement from the Modi’s administration also suggests that the public sector enterprises now have to purchase from MSMEs 25% of their inputs, as opposed to the earlier percentage of 20. Out of the 25%, 3% of it will be obtained by women-led MSMEs or women entrepreneurs.

More ‘Diwali Gifts’ for MSMEs

  • MSMEs will enjoy improved cash cycles as now all public-sector corporates which have turnover more than Rs 500 crore have to essentially register on the portal of Trade Receivables Electronic Discounting System
  • Pharma MSME companies will have clusters created for them. The central government will bear 70% of its cost. Clusters will help the companies to reach the customers easily.
  • MSMEs will be freed from Inspector Raj.
  • Environmental clearance process has been simplified for MSMEs. Under the Air and Water Act, now they require only one approval for “consent to establish” and “environmental clearance.”
  • Under the Companies Act, they’ll be cleared off easily for minor offenses. This will prevent unnecessary harassment of the owners of small businesses.
  • The govt. has decided to invest up to Rs 6,000 crore as to grow the centers for technology for small businesses.
  • Now, the enterprises will have to file one return in a year under the laws of eight labor.