Rs 10,000 Crore 'Fund of Funds' being created for MSMEs to battle Covid downturn

New Delhi [India], Apr 17 (ANI): The government will soon approve a Rs 10,000 crore 'Fund of Funds' for mirco, small and medium enterprises (MSMEs) with high credit rating if they raise money from capital markets, Union Minister Nitin Gadkari said on Friday.
"We are releasing Rs 10,000 crore 'Fund of Funds' for the good units of our SMEs, which export and have a good turnover in banks," Gadkari said while addressing participants at a webinar organised by the Young Presidents' Organisation.
Approaching stock markets rather than banks will bring down borrowing costs and make MSMEs more competitive in global markets, Gadkari added.
The proposal of Rs 10,000 crore 'Fund of Funds' has been cleared by the Ministry of Finance and will be sent to the Union Cabinet for final approval, informed the minister.
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 credit-worthiness.
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, then the government will put in 15 per cent of the amount," said the Minister of MSMEs.
These units contribute about 29 per cent of India's GDP, 49 per cent of exports and offer around 11 crore job opportunities.
The government has restructured about six lakh MSMEs.
"The deadline is being extended from March 31 to December 31 so that the number can go up to 15 lakh,," said the minister adding the definition of MSMEs is also being altered.
Gadkari assured all possible help from the government to tide over the challenges created by the lockdown due to COVID-19 outbreak.
He, however, said that 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 on the need to strike an equilibrium to ensure everyone's survival. (ANI)