New Delhi/Mumbai: India's government has firmed up a proposal to guarantee loans given to small businesses by financial institutions, as it seeks to kick-start business when the coronavirus lockdown starts to ease, a government source and two bank officials said. "Up to 100% of loans given to MSMEs (micro, small and medium enterprises) would be sovereign-backed under the new scheme so that national credit pours into MSMEs," said a top government official familiar with the plan.
The size of the fund is likely to be based on immediate needs, and the guarantee could be between 25% and 100%, depending on the size of the company or the risks undertaken, said two bankers.