Budget 2024: Govt Introduces Credit Guarantee Scheme, Increases Mudra loan Limit For MSMEs

The finance minister said that the measures related to the MSME's are aimed to ease financing, ease regulatory compliance and enable technology support. These measures, she said, will enable these industries to grow and compete globally.

Among key announcements is the increase in TARUN category of MUDRA loans from the current limit of ₹10 lakhs to 20 lakhs. This will be available for those entrepreneurs who have availed and successfully repaid the entire loan under TARUN category.

The finance minister also said that a credit guarantee scheme will be introduced for manufacturing MSME's to provide term loans without collateral, or third party guarantees for their purchases. A self-financing guarantee fund, formed by pooling the credit risk of companies, will provide guaranteed cover up to ₹100 crore for each applicant, though the loan amount might be higher. The borrower will have to pay an upfront guarantee fee and an annual guarantee fee for the reduced loan amount.