Lok Sabha Question No. 3364 (UNSTARRED), answered on 2025-03-20
Subject: Financial Challenges faced by MSMEs
Ministry: MICRO, SMALL AND MEDIUM ENTERPRISES
Asked by: Shri Manickam Tagore B, Shri Vijayakumar Alias Vijay Vasanth

## GOVERNMENT OF INDIA MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK  SABHA UNSTARRED QUESTION NO. 3364 TO BE ANSWERED ON 20.03.2025

## FINANCIAL CHALLENGES FACED BY MSMEs

## 3364. SHRI VIJAYAKUMAR Alias VIJAY VASANTH: SHRI MANICKAM TAGORE B:

Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:

- (a) the steps taken to address the ongoing credit challenges faced by MSMEs, particularly with respect to the issues of collateral requirements, lengthy paperwork and concerns over loan repayment capabilities;
- (b) the details on the specific measures implemented to address these challenges;
- (c) whether reports indicate that small businesses are still finding it difficult to access financial assistance and if so, the details thereof;
- (d) the reasons  that MSMEs continue to face challenges in getting access to financial assistance despite the allocation of Rs. 15,700 crore in the budget and if so, the details thereof;
- (e) whether  the  Government  has  taken  steps  to  address  the  issue  of  MSMEs  lacking  collateral,  which remains a significant barrier to securing credit; and
- (f) whether with a growing need for financial support, the Government plans to expand or introduce new schemes, such as the CGTMSE, to facilitate collateral-free loans and if so, the details thereof?

## ANSWER

## MINISTER OF STATE FOR MICRO, SMALL AND MEDIUM ENTERPRISES (SUSHRI SHOBHA KARANDLAJE)

(a) & (b): A  number  of  steps  have  been  taken  to  address  the  financial  requirement  of  MSMEs.  For providing ease of access to finance, a number of schemes such as Prime Minister's Employment Generation Programme, Special Credit Linked Capital Subsidy Scheme, Credit Guarantee Scheme (CGS) for Micro and Small  Enterprises,  PM  Vishwakarma  Yojana,  Pradhan  Mantri  Mudra  Yojana,  etc.  are  implemented.  The enhancement of credit guarantee ceiling under CGS from Rs. 5 crore to Rs. 10 crore has been announced in the Budget 2025-26.

(c) to (f): As informed by Reserve Bank of India (RBI), RBI vide Master Direction on Lending to Micro, Small  &  Medium  Enterprises  (MSMEs)  Sector,  dated  July  24,2017  (updated  as  on  June  11,  2024),  has mandated banks not to accept collateral security in the case of loans upto Rs. 10 lakh extended to units in the Micro and Small Enterprises sector. Further, the Empowered Committee on MSME chaired by Reserve Bank of India monitors the loans sanctioned/ disbursed by MLIs under the Credit Guarantee Scheme. This is also one of the Agenda Items in the State Level Bankers Committee.

As informed by National Credit Guarantee Trustee Company, to resolve the challenge of MSMEs relating to collateral  requirements,  the  Government  of  India  has  launched  other  credit  guarantee  schemes  like  Credit Guarantee Fund for Micro Units and Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME), where collateral is not necessary. Under MCGS-MSME collateral free loans upto Rs. 100 crore are provided.

Further, Union Budget 2025-26 have made following announcements for MSMEs:

- i. Credit cards for Micro Enterprises registered on Udyam Portal,
- ii. A new scheme to  provide  term  loans  up  to  Rs.2  crore  to  Women,  Scheduled  Castes  and  Scheduled Tribes first-time entrepreneurs.

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