‘Compact’ MSME credit cover scheme likely by Q4

THE GOVERNMENT IS poised to launch a compact version of a Covid-era credit guarantee scheme for micro, small and medium enterprises (MSMEs) only in the next quarter, as the contours of the programme are still being finalised, sources said.

- PRASANTA SAHU

The scheme aims to encourage banks to extend additional loans—of up to 20% of outstanding credit—to MSMEs, including those whose accounts have slipped into special mention account (SMA) categories due to temporary business setbacks or payment delays.

The move is intended to support units affected by external headwinds such as US tariffs and other global factors. The Centre is expected to provide a 100% guarantee cover on the incremental 20% loans extended by lenders, the sources said.