Low-cost credit cards for MSMEs soon

Scheme to include a credit guarantee cover

- PRASANTA SAHU

The government is developing a scheme under which banks will issue credit cards with a limit of ₹5 lakh to micro enterprises, aimed at helping them meet immediate working capital needs at affordable interest rates. The scheme will include a credit guarantee cover, marking a first for such a financial product.

Currently, credit cards offer an interest-free period of 30 to 45 days, depending on the card and the bank. Once this period ends, banks typically charge an interest rate of 2% to 2.5% per month—or 25% to 30% annually—with some charging even higher rates.

Small firms frequently face cash flow challenges, especially due to delayed payments from larger buyers, which can extend up to 90 days or more. These delays often hinder their ability to manage operational costs, pay suppliers, and handle payroll—potentially disrupting production cycles.