On February 1, Finance Minister Nirmala Sitharaman announced a significant move aimed at benefiting Micro, Small, and Medium Enterprises (MSMEs) in India.
The government introduced credit cards specifically designed for MSMEs to help small businesses access loans more easily.
This initiative will follow the model of the Kisan Credit Card, which has been beneficial to farmers.
10 Lakh MSME Credit Cards in the First Year
As part of the Union Budget, the government plans to issue 10 lakh MSME credit cards within the first year. Each card will have a credit limit of Rs 5 lakh.
This step is expected to greatly improve liquidity for small businesses, addressing one of their biggest challenges.
Jyoti Prakash Gadiya, Managing Director of Resurgent India, called this a game changer, especially for micro-enterprises registered on the Udyam portal.
Easier Access to Loans
Small enterprises often struggle to secure funding for their operations. With the introduction of MSME credit cards, businesses will have an easier time overcoming working capital issues.
This move is seen as a major step toward improving financial inclusion for small businesses across the country.
Importance of MSMEs in India
India has over 1 crore registered MSMEs, which provide jobs to around 7.5 crore people. These enterprises contribute 36% to manufacturing and 45% to exports.
Recognizing their critical role in the economy, the government plans to gradually extend the availability of MSME credit cards to more businesses.
Lower Interest Loans for MSMEs
MSMEs will benefit from loans at much lower interest rates through these new credit cards.
Currently, small businesses face interest rates of 18-20%, but with the new cards, loans will be offered at a reduced rate of 8-10%.
This reduction will help lower production costs, making their products more competitive.
The Udyam portal will also provide customized credit cards tailored to the needs of small businesses.
