To facilitate an easy access to finance by MSMEs, the Government/RBI has:

(i) launched Credit Guarantee Fund Scheme for Micro and Small Enterprises to provide guarantee cover for collateral free credit facilities extended to micro and small enterprises (MSEs) upto ₹ 1 Crore.

(ii) issued guidelines in mandatorily requiring banks to dispense with collateral requirement for loans upto ₹ 10.00 lakh to MSEs.

(iii) set up a Micro Units Development & Refinance Agency (MUDRA) Ltd. which would be responsible for refinancing all Micro-finance Institutions (MFIs), which are in the business of lending to micro / small business entities engaged in manufacturing, trading and services activities upto ₹ 10.00 lakh.

This information was given by the Union Minister for Micro, Small and Medium Enterprises, Shri Kalraj Mishra in a written reply to a question in Rajya Sabha here today.

Credit guarantee scheme expands collateral-free lending and establishes refinance support to boost MSME access to finance. The Government and RBI implemented measures to expand MSME access to finance through a Credit Guarantee Fund Scheme that provides guarantee cover for collateral-free credit to micro and small enterprises, mandatory banking guidelines dispensing with collateral for small-value loans, and establishment of MUDRA Ltd. as a refinancing agency for microfinance institutions serving micro and small business borrowers.