Source: Techie Expert
“The government’s announcements are significant steps in easing the economic pain for MSMEs. As the economy comes back to life over coming weeks, arranging liquidity and meeting expenses will be key challenges for every MSME. The package announced yesterday is unprecedented in both magnitude and the mechanism.
The 3 lac crore package will enable immediate access to additional lines from Banks to MSMEs. The 1 year moratorium will ensure that SMEs can focus on immediate exigencies and bring their business back to life and not worry about interest and repayments. A sovereign backing of this scale has not been done earlier. Given the high NPA levels, the additional support to stressed MSMEs through fund and equity participation is promising, however the execution details need to be seen.
The change in MSME definition to allow for higher investment and turnover is a welcome step as it will allow more enterprises to get included in the MSME setup and get access to cheaper financing and relieve packages. The market did expect a even wider definition and easier process, but some progress had been made.
The 30,000 crore backing to Banks for extending lines to NBFCs and Housing Finance companies will enable a trickledown effect and spur them to finally start lending again.”
Mr. Ram Iyer – Founder & CEO, Vayana Network