Reasons for this Scheme Introduction:

One of the main reasons for this initiative is to aggregate the different banking services under one roof to provide the best services to customers.

The Government has governed the nationalized banks to include housing infrastructure loans and automobile loans under one scheme. A lot of technological infrastructural development has been invested to propel the wheels of the credit market in the Indian economy.

The customers are positively affected by this scheme as they are now able to understand the opportunities and obstacles of the banking policies of individual financial institutions.

Pradhan Mantri Mudra Yojana

Micro Units Development and Refinance Agency (MUDRA) Loan scheme under Pradhan Mantri Mudra Yojana is a scheme that was launched by the Government of India that offers loans to individuals and MSMEs which help out banks and NBFCs. MUDRA Yojana offered loans under 3 loan schemes, named Shishu, Kishor, and Tarun. Loans offered by banks under the MUDRA scheme are collateral-free. Loans under the MUDRA scheme can be assisted by individuals, startups, shopkeepers, retailers, traders, small manufacturers, craftspeople, MSMEs, and businesses involved in the Manufacturing, Trading, and Services Sectors, only.

Types of Mudra Schemes-

  1. Shishu
  2. Kishor
  3. Tarun

Loan Amount 

  • Under Shishu Scheme: Up to Rs. 50,000
  • Under Kishor Scheme: Rs. 50,001 – Rs. 5,00,000
  • Under Tarun Scheme: Rs. 5,00,001 – Rs. 10,00,000

Interest Rates As per the applicant’s profile and business requirements

  • Processing Charges-Nil, or 0.50% of the loan amount
  • Collateral/Security-Not required by Banks/NBFCs
  • Repayment Tenure-From 12 months to 5 years

Credit Guarantee Fund Trust For Micro And Small Enterprises (CGTMSE)

CGTMSE is an initiative of the Government of India in cooperation with the Ministry of Micro, Small and Medium Enterprises (MSME) and the Small Industries Development Bank of India (SIDBI) launched on 30th August 2000. The Credit Guarantee Fund Trust for Micro and Small Enterprises(CGTMSE), and it is apparent from the name, it’s a Trust which provides the financial institutions with credit guarantee to provide loans to SMEs and MSMEs.

The basic aim of CGTMSE is to uplift first-time entrepreneurs to establish SMEs and MSMEs, considered to be the bulwark of the Indian economy by availing of collateral-free loans from eligible financial institutions. The assurance covers default by the borrower to repay the advance. Thus, the CGTMSE scheme primarily envisages the provision of loans to first-generation entrepreneurs so that they can flourish in the competitive environment without the burden of security or third-party guarantees. In turn, the financial institutions offered cover for the absence of security to fund SMEs and MSMEs promoted by small Indian businessmen up to a certain limit.

All loans prior to 1st January 2013 enjoying guarantee cover provided by any MLI shall continue to pay ASF at the following rates:

  1. Credit facility up to Rs.5 lakhs: 0.50% of the guaranteed amount.
  2. Credit facility from Rs.5 lakhs up to Rs. 1 crore: 0.75% of the guaranteed amount

NSIC Scheme-National Small Industries Corporation

The National Small Industries Corporation (NSIC) is a Public Sector Undertaking (PSU) that comes under the horizon of the Ministry of Micro, Small & Medium Enterprises of India. It was set up by the Government of India in 1955 to promote and aid the growth of micro, small, and medium enterprises (MSME) in India. NSIC enhances the competitiveness of the MSMEs by facilitating specially customized schemes while also offering integrated support services in technology, marketing, support, and finance.