GST-registered MSMEs can now avail up to INR 1 Cr in loans in 59 minutes

Source: Fortune India

The Government of India recently announced a fast-track loan sanction of up to INR 1 Cr for Micro, Small, and Medium enterprises (MSMEs) that are registered under GST. This comes as a welcome move given the fact that the nation’s second biggest employing sector and an ardent contributor to the GDP has always been prone to liquidity crunch, and easy access to cheap working capital is a dream far-fetched.

With the general elections approaching, the government is getting back to its prime source of support, the MSMEs that have been cash-strapped, more so after demonetization and GST implementation.

  • The next 2 years would see a financing requirement of almost INR 4.5 lakh crores.
  • With 11 out of 21 PSU under the scrutiny of RBI, NBFCs will need to step up to fill the void.

PM Modi in his 12-point action plan has addressed and proposed measures for some of the key issues being faced by the MSMEs of the country. In addition to loans being sanctioned through a link on the GST portal in 59 minutes, there are provisions for interest subvention for fresh and incremental loans; and increase in interest rebate from 3% to 5% for exporters. Small traders’ ease of doing business has been made a priority, and regulations pertaining to labour laws have been relaxed.

“Linking loan approvals to GST returns will encourage more and more MSMEs to become a part of the formalised economy. Besides, any platform which can reduce friction and give convenient access to finance to the MSMEs will see rapid adoption,” Vinod Parmar, Global Head – Sales & Marketing at Vayana Network, was quoted as saying by Fortune India.