Govt to create 'Fund of Funds' for MSMEs to tide over COVID-19 crisis: Gadkari

New Delhi [India], Apr 17 (ANI): The government will soon approve a 'Fund of Funds' to buy up to 15 per cent of equity in mirco, small and medium enterprises (MSMEs) with high credit rating if they raise money from capital markets, Union Minister Nitin Gadkari said on Friday.
Approaching stock markets rather than banks will bring down borrowing costs and make MSMEs more competitive in global markets, he said while addressing 250 participants at a webinar organised by the Young Presidents' Organisation.
The proposal of 'Fund of Funds' has been cleared by the Ministry of Finance and will be sent to the Union Cabinet for final approval, said Gadkari.
He said a separate scheme is being formulated for credit ratings of MSMEs based on their annual turnover, exports and GST payments. The government wants the Fund's corpus to be utilised by MSMEs having AAA rating which implies high creditworthiness.
Gadkari said up to 15 per cent of the amount an AAA-rated MSME raises from the capital market will be contributed by the government through the Fund as equity. "If you are able to raise Rs 50 crore, the government will put in Rs 7.5 crore."
MSMEs contribute about 29 per cent of India's GDP, 49 per cent of exports and offer around 11 crore job opportunities.
Gadkari assured all possible help from the government to tide over the challenges created by the lockdown due COVID-19 outbreak. However, he said, the government is also facing a financial crisis.
"Some state governments do not have enough money to pay salaries to staff next month. The situation of banks is also challenging in terms of their survival," said the minister, emphasising the need to strike an equilibrium to ensure everyone's survival.
(ANI)