The government has launched a special scheme for Informal Micro Enterprises (IMEs) to provide them easy access to credit without collateral or third-party guarantee. The scheme is expected to empower individual entrepreneurs and create an inclusive, dynamic, and resilient economic ecosystem.
What are Informal Micro Enterprises?
Informal Micro Enterprises (IMEs) are small businesses that operate in the unorganized sector of the economy. They are not registered under the Goods and Services Tax (GST) regime or are exempted from the CGST Act, 2017. They typically have low capital, low turnover, and low employment.
According to the government, there are about 6.3 crore IMEs in India, accounting for 45% of the manufacturing output and 40% of the exports. They also provide employment to about 11 crore people.
What is the special scheme for Informal Micro Enterprises?
The special scheme for IMEs is launched by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which is a joint initiative of the government and the Small Industries Development Bank of India (SIDBI).
Under the scheme, eligible IMEs can borrow up to Rs 20 lakh from banks and other financial institutions without any collateral or third-party guarantee. The CGTMSE will provide a credit guarantee cover of 75% to 85% to the lenders, depending on the loan amount and category of the borrower.
The scheme will also provide interest subsidy of 2% per annum to women entrepreneurs, SC/ST entrepreneurs, and entrepreneurs from North-Eastern Region, Jammu & Kashmir, Ladakh, Andaman & Nicobar Islands, and Lakshadweep.
The scheme will be valid till March 31, 2024 or till the utilization of Rs 10,000 crore corpus of CGTMSE, whichever is earlier.
How to apply for the scheme?
To apply for the scheme, IMEs need to register themselves on the Udyam Assist Platform (UAP), which is a web portal launched by the Ministry of Micro, Small and Medium Enterprises (MSME) on January 11, 2023.
The UAP will provide a unique Udyam Registration Number (URN) to each IME, which will serve as an identity proof and a certificate of recognition as an MSME. The URN will also enable the IMEs to avail various benefits under the MSME schemes, such as priority sector lending, subsidies, tax exemptions, etc.
The UAP will also facilitate online application and sanction of loans under the special scheme for IMEs. The IMEs can choose from a list of empanelled lenders on the portal and submit their loan proposals online. The lenders will process the loan applications within 15 days and disburse the funds within 7 days after sanction.
What are the benefits of the scheme?
The scheme will provide several benefits to the IMEs, such as:
- Easy access to credit without collateral or third-party guarantee
- Low interest rate and interest subsidy
- Credit guarantee cover by CGTMSE
- Formalization and recognition as MSMEs
- Eligibility for various MSME schemes and incentives
- Enhanced competitiveness and productivity
- Increased employment and income generation
The scheme will also benefit the lenders, such as:
- Reduced credit risk perception
- Increased lending portfolio
- Improved asset quality
- Higher profitability
The scheme will also benefit the economy, such as:
- Boosting the growth and development of the MSME sector
- Promoting entrepreneurship and innovation
- Creating an inclusive, dynamic, and resilient economic ecosystem
- Supporting self-reliance and Atmanirbhar Bharat
Meta description: A brief overview of the special scheme for Informal Micro Enterprises (IMEs) launched by CGTMSE to provide them easy access to credit without collateral or third-party guarantee.
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