The Parliamentary Standing Committee on Finance is mulling to provide a credit card to MSME entrepreneurs. According to The Economic Times, the proposed move is aimed at ensuring credit access to small businesses and incorporating them into a formal financing system.
The card, similar to Kisan credit card, is expected is to help the small businesses with working capital, trade financing, provide capital loans at affordable rates, and necessary credit guarantees, the report further said.
At present, only 6.34 crore MSMEs, which make up less than 40 percent of the country’s MSMEs, have borrowed from the formal financial system. The total credit gap in the sector is anticipated to be around Rs 20-25 lakh crore currently.
“The idea is that when you sign up for the Udyam portal, you automatically get a credit card which is the Vyapar credit card. Every institution can decide how big a line of credit they want to give and with that they establish your payment history,” committee chairman Jayant Sinha was quoted as saying by The Economic Times.
In February, Union Bank of India launched Union MSME RuPay Credit Card in association with National Payments Corporation of India (NPCI) to provide a simplified payment mechanism to MSMEs to meet their business-related operational expenses. The RuPay Card offers benefits like anytime digital payments, interest-free period and will carry interest rate similar to the rate charged for loans.
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MSMEs will also get specially curated efficient business services on this card which will help them in taking their business on most of the digital platforms.
