MSMEs are facing massive liquidity and supply crunch amid the COVID-19 lockdown
SIDBI will provide liquidity support through instant funds through its new Direct Finance Window (Liquid) 2.0. check details
To boost liquidity to the COVID-19-hit small and medium scale industries, India’s premier financial institution for MSMEs – Small Industries Development Bank of India (SIDBI) has unveiled a new version of its liquidity scheme. SIDBI will work to provide liquidity support through immediate funds through its new Direct Finance Window (Liquid) 2.0. For its existing customers, SIDBI has introduced LIQUID 2.0 under which it will provide term loans for the purpose of executing new orders, purchase of raw material, equipment, clearing unpaid creditors etc. The bank said MSMEs will also get support under the first and second edition of the new liquidity scheme up to 20 per cent of their highest outstanding in the last 12 months with a maximum exposure of Rs 1.5 crore and an aggregate exposure of Rs 2.5 crore.
The unique features of LIQUID 2.0 are – a) zero contribution from the promoters of the enterprise, b) subsidized interest rate, c) low processing fee, d) no prepayment charges, e) simplified process, f) quick approval and fast delivery.
The new liquidity offer comes in continuation of various measures taken by SIDBI and the government to provide a lifeline to MSMEs battling the impact on business due to the COVID-19 lockdown. The Central Government has taken several initiatives to bring reforms especially to ease the doing business conditions for these small and medium sized industries. The new reforms meant that the government would work to provide a more conducive environment for MSMEs and eliminate the ‘inspector raj’ in business related licenses. The government shifted to a digital random inspection system that would reduce the harassment faced by the entrepreneurs managing these MSMEs.
PM Modi said in a LinkedIn blog, despite the challenges faced during the COVID-19 pandemic, 20 states that have now adopted this system were now eligible for an additional loan of Rs 39,521. States implementing this new reform will now be eligible to borrow an additional 0.25 per cent of their Gross State Domestic Product (GSDP).
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