With Rs 1.62 lakh cr outstanding, govt aid for Shishu loan borrowers

Tribune News Service

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New Delhi, June 24

The Union Cabinet on Wednesday approved a scheme for interest subvention of two per cent for one year to all Shishu loan accounts under the Pradhan Mantri Mudra Yojana (PMMY) to eligible borrowers.

The scheme will be extended to loans which are outstanding on March 31, 2020, but are not in the non-performing asset (NPA) category.

The interest subvention would be payable for the months in which the accounts are not in NPA category including for the months that the account becomes a performing asset again The government expects the scheme to incentivise people to make regular repayments of loans.

The estimated cost of the scheme would be approximately Rs 1,542 crore which would be provided by the Centre.

This scheme is one of the measures relating to MSMEs, announced under the Atma Nirbhar Bharat Abhiyan. PMMY loans for income generating activities up to Rs 50,000 are termed as Shishu loans.

As on March 31, 2020, about 9.37 crore loan accounts under the Shishu category of PMMY with a total loan amount of about Rs 1.62 Lakh crore, were outstanding.

The scheme will be implemented through the Small Industries Development Bank of India (SIDBI) and will be in operation for 12 months.

The government said the scheme has been formulated as a specific response to an unprecedented situation and aims to alleviate financial stress for borrowers at the ‘bottom of the pyramid’ by reducing their cost of credit. It is expected to enable small businesses to continue functioning without laying off employees due to lack of funds.

By supporting small businesses to continue functioning during these times of crisis, the Scheme is also expected to have a positive impact on the economy and support its revival, which is necessary for employment generation in future.