Budget 2023: MSMEs get Rs 9,000 cr corpus for revamped credit guarantee scheme

FM Nirmala Sitharaman outside Finance Ministry on Budget Day 2023

Finance Minister Niramala Sitharaman on Februray 1 announced Rs 9,000 crore infusion into the corpus to revamp credit guarantee scheme for MSMEs during the budget speech.

The scheme will be effective from April 1, 2023, says finance minister.

Sitharaman also said that an announced infusion is expected to enable additional collateral-free guaranteed credit of Rs 2 lakh crore and reduce cost of credit by 1 percent.

"Last year, I proposed revamping of the credit guarantee scheme for
MSMEs. I am happy to announce that the revamped scheme will take effect
22 from April 1, 2023 through infusion of Rs 9,000 crore in the corpus," Sitharaman said in an speech.

Further, to provide relief to MSMEs, finance minister said that in cases of failure by MSMEs to execute contracts during the Covid period, 95 per cent of the forfeited amount relating to bid or performance security, will be returned to them by government and government undertakings.

"This will bring stability to the scheme and promote financial inclusion and employment growth in the sector. The announcement of 1% reduction in cost of credit bodes well for last-mile lenders who extend financing to the underserved MSME sector," said Hardika Shah, Founder & CEO, Kinara Capital.