Medium scale companies may be given credit risk cover

NEW DELHI: The government is looking to provide credit guarantee to midsized companies to access more and cheaper funds, enlarging the scope of the existing scheme, which is restricted to micro and small enterprises.The

Credit Guarantee Fund Trust for Micro and Small Enterprises, run by the government and financial institution Sidbi, has floated a consultation paper to banks, where it has estimated that it will get business of around Rs 4,000 crore during the first year. It has also said that the fund has sufficient corpus to meet the requirement of medium-sized companies.

 


The government classifies entities with investment in equipment of over Rs 2 crore but under Rs 5 crore as medium enterprises, while those with investment below Rs 2 crore are classified in the two other buckets — micro and small.

“The proposed inclusion of medium enterprises will resolve the issue of units becoming ineligible on its upgradation to medium category from small category on investment in plant and machinery/ equipment,” the consultation paper said, while adding that it “The proposed inclusion of medium enterprises will resolve the issue of units becoming ineligible on its upgradation to medium category from small category on investment in plant and machinery/ equipment,” the consultation paper said, while adding that it will help create more jobs and boost exports.