Govt to provide Rs 10 cr collateral-free loans for entrepreneurs
The Delhi Government on Tuesday signed an MoU with the Central Government entity, the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), to provide collateral-free loans up to Rs 10 crore to city-based entrepreneurs.
The primary objective of the scheme is to address the biggest challenge faced by small entrepreneurs’ access to bank credit by enabling them to avail loans without providing any collateral or security.
Speaking at the signing of the MoU, Delhi Chief Minister Rekha Gupta termed the move as an important step towards financial empowerment to achieve the goal of a “Viksit Delhi”.
She said the Delhi government has set aside a fund of Rs 50 crore to service loans worth Rs 2,500 crore without the need of any collateral. She said there was no cap on the number of beneficiaries, even as an initial target of one lakh was set initially.
She said under the scheme, the Centre will extend a 75-90 per cent guarantee to cover the loan amounts, and the remaining guarantee will be provided by the Delhi Government.
It will cover all sectors, including manufacturing, service, and retail, she said, adding that the Delhi Government has set 10 per cent as the non-performing assets (NPA) limit to keep its financial liability in check.
Explaining the operational details of the scheme, the Chief Minister stated that under the Delhi Credit Guarantee Scheme, the responsibility for loan guarantees will be jointly shared by the Government of Delhi and CGTMSE. Of the total loan amount, CGTMSE will provide a guarantee cover of 75 to 90 per cent, while the remaining portion will be secured by the Delhi Government.
As a result, up to 95 per cent of the loans extended by banks will be government-guaranteed, reducing the banks’ exposure to just 5 per cent and enabling them to lend more confidently to small businesses.
“There are lakhs of youths, startups, traders, and manufacturers in Delhi who were forced to take rounds of the banks for the loans and were unable to get it due to the requirement of collateral. All of them will now be able to have these security-free loans,” Gupta said. The Chief Minister stated that the government initially aims to reach one lakh beneficiaries under the scheme. However, CGTMSE has clarified that there will be no cap on the number of beneficiaries. Any eligible small entrepreneur in Delhi who fulfils the scheme’s criteria will be able to avail a loan backed by the Delhi Government’s guarantee.
Industry Minister Manjinder Singh Sirsa said women and SC entrepreneurs have been provided further relief in the scheme under which about one lakh persons are expected to benefit this year.
It has also been announced by the Chief Minister that the government is ready to increase the number of beneficiaries and the loan amount of Rs 2,500 crore, if need be, he said.
