MSME Banking Role & Responsibilities in MSME Sector

The micro, small & medium enterprises (MSME) role in the growth of Indian economy is comparatively high. The financial support in the form of bank loans plays an important role to boost the small scale MSME sector from a large prospective. 

We first need to understand MSME Banking before we go about how financial assistance helps to grow the MSME sector. The Government of India has launched a number of Banking schemes for different MSME sectors to promote their business as well as be vocal for local campaigns.

MSME loan scheme 2020 to boost the MSME sector to overcome in COVID crisis.

The Government of India has recently announced Rs 3 lakh crore for the micro, small & medium enterprises to support them after the post COVID period. This is one of the biggest business opportunities for banks, who will deal with this. 

The managing director of The State Bank of India has said that this scheme will give a big relief to the MSME sector, which is deeply affected by the COVID-19 crisis. The managing director has expected that the MSME loan scheme 2020 will pick up boost once the desired demand in the market increases.

According to the sources of the finance ministry, the public sector banks have already distributed loans worth Rs 8320 crore to micro, small & medium enterprises in 12 states under emergency credit line guarantee scheme (ECLGS). 

MSME loan schemes for new MSME business 

The Government of India has announced a number of MSME Loan Schemes to fund new as well as existing MSME sectors. The MSME sector plays a very important role to boost Indian GDP and contributes around 40% of the total GDP of the country. 

MSME Business loans in 59 minutes

The Government of India has announced MSME Business loans in 59 minutes scheme in September 2018. Both new & existing MSME businesses can apply for this business loan scheme. 

Under this scheme, MSME sectors can get financial assistance up to Rs 1 crore and this process takes around 8 to 12 days to complete. While the approval or disapproval for business loans under this scheme is granted within 59 minutes after application. The interest rates under this scheme depending on the nature and purpose of business. 

To apply under this scheme for business loans, you are required to do GST verification, Income tax verification, Bank account statements for the last 6 months, ownership related documentation, and KYC verification.

MUDRA Loans

Micro-Units Development and Refinance Agency (MUDRA) is an organization established by the Government of India to finance micro business units. The motive of this scheme is to provide funds to unfunded units that solely depend on their own resources to run business activities. 

The loan under the MUDRA Loan scheme is funded by public sector banks, private sector banks, cooperative societies, commercial banks, and rural banks covered under this scheme. MUDRA Loan scheme covers small scale business units undertaking their business in manufacturing, trading, and service sectors.

The MUDRA Loan scheme is structured under 3 pillars as mentioned below.

1. Sishu Loans up to Rs 50,000/-
2. Kishor Loans up to Rs 5,00,000/-
3. Tarun Loans up to Rs 10,00,000/-