Govt likely to pledge Rs 3-trn in loans to MSMEs amid Covid-19 outbreak

Small firms will be eligible to borrow an additional 20 per cent of their credit limit. The extra debt will be fully backed by the government

The central government is considering a proposal to guarantee as much as Rs 3 trillion ($39 billion) of loans to small businesses as part of a plan to restart economy, which is reeling under the impact of a 40-day lockdown, people with knowledge of the matter said.

Under the proposal, small firms will be eligible to borrow an additional 20 per cent of their credit limit, the people said, asking not to be identified as the discussions are private. The extra debt will be fully backed by Prime Minister Narendra Modi’s administration, the people said. The government will set up