Finance ministry working on new policies to enhance access to funding, loans for MSMEs  

The MSME sector may soon receive a financial boost as the Ministry of Finance is considering new policy measures to improve access to funding and loans, according to industry sources. 

“The government aims to enhance fund access for MSMEs, and banks have been approached to support this initiative,” a senior official told Business Today TV. 

If funding is increased, it could not only strengthen working capital for MSMEs but also support job creation — an important government priority, sources said.  

This proposed scheme will differ from the credit guarantee scheme announced in the Union Budget, which introduced a new program specifically for MSMEs in the manufacturing sector to secure loans for equipment and machinery without collateral or third-party guarantees. 

As per sources, the credit guarantee programme, which covers loans up to Rs 100 crore, is currently undergoing inter-ministerial review and is expected to launch soon. 

Recent RBI data shows a 13.3 percent year-on-year growth in advances to micro and small enterprises, with medium enterprises registering 17.2 percent growth, while the FY23-24 data shows there was a slowdown in the growth of loans for micro-small and medium enterprises at 10.2 percent and 9.7 percent, respectively, compared to 28.3 percent and 36.8 percent growth, respectively, in 2022-23. 

Additionally, the Union Finance Minister Nirmala Sitharaman introduced a mechanism in the Budget to help MSMEs maintain credit access during financially challenging times. The mechanism is aimed at supporting MSMEs in the ‘special mention account’ (SMA) phase, ensuring credit continuity to prevent their loans from becoming Non-Performing Assets (NPA). 

Union Finance Minister Nirmala Sitharaman is set to meet with MSMEs in Bengaluru and will inaugurate several SIDBI branches on November 9.