Loan for MSMEs in 59 minutes

What is Important?
UPSC perspective:
Prelims :About MSMEs
Mains:Highlights & Significance

Why in News?

Prime Minister Narendra Modi on Friday announced 12 measures to boost the Micro, Small and Medium Enterprises (MSME) sector, including a portal that would enable them to get a loan in just 59 minutes and interest subvention of 2%.

About MSMEs

Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 which was notified on October 2, 2006, deals with the definition of MSMEs. The MSMED Act, 2006 defines the Micro, Small and Medium Enterprises based on:
*The investment in plant and machinery for those engaged in manufacturing or production, processing or preservation of goods and
*The investment in equipment for enterprises engaged in providing or rendering of services.


12 initiatives
*59 minute loan portal to enable easy access to credit for MSMEs. Loans upto Rs. 1 crore can be granted in-principle approval in just 59 minutes through GST Portal.
*2 percent interest subvention for all GST registered MSMEs on fresh or incremental loans . Increase in interest rebate from 3 percent to 5 percent For exporters who receive loans in the pre-shipment and post-shipment period.
*All companies with a turnover more than Rs 500 crore will now compulsorily be brought on the Trade Receivables e-Discounting System (TReDS). It will enable entrepreneurs to access credit from banks. This will resolve the problems of cash cycle.
*Public sector companies will now need to compulsorily procure 25 percent, instead of 20 percent of their total purchases from MSMEs.
*Out of the 25 percent procurement mandated from MSMEs, 3 percent will now be reserved for women entrepreneurs.
*All public sector undertakings of the Union Government must now compulsorily be a part of GeM.
*20 hubs will be formed across the country and 100 spokes in the form of tool rooms will be established.
*Clusters will be formed of pharma MSMEs. 70 percent cost of establishing these clusters will be borne by the Union Government.
*The return under 8 labour laws and 10 Union regulations will now need to be filed only once a year.
*Establishments to be visited by an Inspector will be decided through a computerised random allotment.
*Air pollution and water pollution laws have now been merged as a single consent. The return will be accepted through self-certification.
*Ordinance has been brought under which, for minor violations under the Companies Act, the entrepreneur will no longer have to approach the Courts, but can correct them through simple procedures.
*A mission will be launched to ensure that they have Jan Dhan Accounts, provident fund and insurance.


*To generate large scale employment at low capital cost.
* Flexibility ensures innovation.
*Adaptability –capacity to adjust with changing environment.
*Ensures regional development.

Loan for MSMEs in 59 minutes Loan for MSMEs in 59 minutes Reviewed by The Hindu Current Affairs on November 03, 2018 Rating: 5

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