The Delhi government has decided to offer collateral-free loans worth up to Rs 10 crore to city-based entrepreneurs in a major boost to micro and small enterprises.
Delhi Government Offering Collater-free Loans
In this regard, the Chief Minister Rekha Gupta, along with the Industries Minister Manjinder Singh Sirsa, signed a Memorandum of Understanding (MoU) with Central government entity Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
The government has allocated a fund of Rs 50 crore for service loans worth Rs 2500 crore without the need of any collateral, Gupta explained at the event.
Moving ahead, the CM said that there was no cap on the number of beneficiaries even as a target of one lakh was set initially.
The Centre plans to extend 75-90% guarantee to cover the loan, while the Delhi government will provide the remaining guarantee, under this scheme.
In addition to this, the scheme will cover all small and micro sectors such as manufacturing, service and retail.
To keep its financial liability in check, the Delhi government has also set the non performing assets (NPA) limit at 10%.
A 50-fold Leverage To The City-based Entrepreneurs
“There are lakhs of traders, manufacturers and young entrepreneurs with small-budget start-ups and businesses in Delhi who are forced to run from one bank to another for loans. Many do not get it due to the requirement of collateral. But, it will be a thing of the past… All the small entrepreneurs can now avail collateral-free loans without having to run from pillar to post,” Gupta said while Terming the initiative as a step towards ‘Viksit Dilli’.
In future, the are planning to to allocate more funds, if needed, Sirsa said further explaining that this scheme has a 50-fold leverage, meaning that an investment of Rs 2 crore will enable a loan of up to Rs 100 crore.
Further adding that women and SC entrepreneurs have been provided further relief under the scheme that is expected to benefit around one lakh people this year.
While talking about this initiative, the minister acknowledged this initiative a historic gift for Delhi’s industrial and economic future, as it represents a major structural reform for nearly one million MSMEs in the Capital, including over two lakh manufacturing units.
According to him,“Traditional banking practices, such as excessive documentation, property-related paperwork and collateral requirements have long posed barriers to credit access, particularly for women entrepreneurs…BJP government’s objective is not merely credit disbursal, but to empower MSMEs for large-scale investment and long-term expansion.”
