Fund of Funds for MSMEs to battle against Covid19, to approve 10,000 Crores said Gadkari

Union Minister Nitin Gadkari in the webinar announced that the government will soon approve a fund of Rs. 10,000 crores ‘Fund of Funds’ for micro, small and medium enterprises (MSMEs) with high credit rating if they raise money from capital markets. Govt. has announced to approve Rs.10,000cr for MSMEs with HCRR said Uion Mnister Nitin Gadkari. Addressing webinar organized by young president organization Gadkari stated that soon Centre is releasing Rs.10,000cr 'Funds of fund' for units of small and medium enterprises that can have export and good turnover in banks.

Minister also informed that 'Funds of Fund' of Rs 10,000 crore proposal has been cleared by the Ministry of Finance and will move to the Union Cabinate for its final approval. He has also mentioned that approaching stock markets rather than banks will bring down borrowing costs and turn MSMEs to be more competitive in global market.

Funds of Fund for MSME Sector

The webinar was organised by the Young Presidents’ Organisation where Union Minister Mr. Gadkari was invited to provide the guidance to the young minds. ‘We are releasing Rs. 10,000 crores Fund of Funds for the good units of our SMEs, which export and have a good turnover in banks,’ said Gadkari while addressing the participants in the webinar.

Approaching stock markets rather than the banks will bring down borrowing costs and make MSMEs more competitive in global markets. The proposal of Rs. 10,000 crores Fund of Funds have been cleared by the Ministry of Finance and will be sent to Union Cabinet for final approval, added Gadkari.

He also stated that a separate scheme is being formulated for credit ratings of MSMEs based on their annual turnover, exports and GST payments. The government wants to Fund’s corpus to be utilised by MSMEs having AAA rating which implies high credit-worthiness.

Up to 15% of the amount an AAA-rated MSME raises from the capital market will be contributed by the government through the fund as equity, stated the Union Minister. As per the statistics received from the government’s Press Information Bureau these units contribute up to 29% in India’s GDP, 49% of Exports, and offer around 11 crore job opportunity.

Government re-designed 6 lakh MSMEs

In webinar Union Minister said that Central Government has resigned about 6 lakh MSMEs in last 5 years. The government has also extended the restructuring scheme beyond the March 31, 2020 deadline till December 31, 2020 so that the number can reach upto 15 lakh, said Gadkari. Union Minister also assured all the possible help from the government to help the MSMEs overcome the hinderances faced by them at the in of lockdown due to the covid-19 pandemic.

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Gadkari stated that some state governments are facing problems with funds and do not have enough money to pay to the staff next month. The situation of banks is also challenging in term of their survival. The government is also facing the financial crises due to lockdown, minister added.