Finance Minister Nirmala Sitharaman made major announcements for Micro, Small and Medium Enterprises (MSME) on 1 February. In this, one announcement was of credit card for MSME. The Finance Minister said that MSME credit cards will be issued to small enterprises. Experts say that this step of the government will prove to be a game changer for small enterprises. This credit card issued on the lines of Kisan Credit Card will make it easier for small enterprises to take loans.
1 million credit cards will be issued first year
The Finance Minister said in the union budget on 1 February that 10 lakh credit cards will be issued to micro enterprises. The limit of each MSME credit card will be Rs 5 lakh. People associated with the MSME sector say that this move of the government will eliminate the problem of liquidity to small businesses to some extent. Jyoti Prakash Gadia, managing director of Resurgent India, described the initiative as a game changer for a micro enterprise registered on the venture portal.
It will be easy to take loans for business
He said that small enterprises have to face a lot of difficulty in raising capital for business. With the government’s move to issue MSME Credit Card, the obstacles related to working capital will be removed to some extent. People associated with the MSME sector say that this is a big step towards financial inclusion.
Number of MSME in the country 1 crore
Finance Minister Nirmala Sitharaman said in her budget speech that India has more than 1 crore registered MSMEs. About 7.5 crore people have got employment from them. They account for 36 per cent stake in manufacturing. MSME holds 45 per cent stake in exports. The Finance Minister said on 1 February that 10 lakh MSME credit cards will be issued in the first year. This means that later the government will have to bring more and more MSMEs under the credit card.
Debt will be available at low interest rate
Experts say that small enterprises will get loans at low interest rates through MSME Credit Card. Right now they have to pay interest up to 18-20 percent on debt. However, through MSME Credit Card, they will get a loan on 8-10 percent interest. The cost of funds will reduce the cost of their products. This will increase the competitive capacity of their products. The enterprise portal will offer customized credit cards to small enterprises.