The central government is set to launch a low-cost credit card scheme for micro businesses later this month.
The aim is simple—reduce borrowing costs and help small businesses manage their daily expenses more easily.
Under this plan, eligible businesses can get unsecured credit cards with a limit of up to Rs 5 lakh.
Big Relief: Interest Rates Could Drop by Half
This scheme could bring major savings for small business owners.
Currently, many credit cards charge very high interest rates of 36–42%.
But under the new scheme, rates are expected to be around 18% or even lower.
There will also be a 30-day interest-free period, giving businesses extra time to repay without added cost.
Govt Support to Encourage Banks
To make this scheme successful, the government plans to support banks.
Banks may receive up to Rs 500 per card as assistance for issuing the first 10 lakh cards.
The scheme is also expected to be backed by guarantee programs like Credit Guarantee Fund Trust for Micro and Small Enterprises and Credit Guarantee Fund for Micro Units.
This reduces risk for banks and helps them offer loans at lower interest rates.
How This Helps Small Businesses
Micro businesses often struggle with cash flow issues, especially when payments from clients are delayed.
In many cases, payments can take up to 90 days, making it hard to manage daily expenses like salaries and inventory.
This credit card can act as a quick financial backup, helping businesses stay afloat during such periods.
Convert Dues into Easy EMIs
Another key benefit is flexibility.
Users can convert their outstanding amount into EMIs at lower interest rates (around 10–12%).
This makes repayment more manageable and reduces financial stress.
Who Will Benefit the Most?
The scheme mainly targets small and micro businesses, especially those registered on the Udyam portal.
It will also benefit borrowers under the Mudra scheme, who can access an additional Rs 5 lakh for short-term needs.
Initially, banks are likely to offer these cards to existing customers with a good credit history.
A Big Boost for MSME Sector
This initiative could unlock Rs 25,000–50,000 crore in extra credit every year for small businesses.
By improving access to affordable funds, the scheme is expected to support growth, create jobs, and strengthen the backbone of India’s economy.
Overall, this move could be a game-changer for micro businesses, offering cheaper credit, better flexibility, and much-needed financial support.
