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Soon, MSME merchant credit cards will be available.

Sidbi’s planned VCC includes features like as interest-free credit for 20-50 days and a Mudra loan facility.
This year, the government is expected to launch a merchant credit card (MCC) facility for merchants in the micro, small, and medium enterprise (MSME) category to help their businesses deal with short-term liquidity issues. According to official sources, it is being created along the lines of the Kisan Credit Card and will likely offer incentives such as short-term, collateral-free loans up to a limit at a lower rate to these units.
However, the state-run Small Industries Development Bank of India (Sidbiintention )’s to create a digital “UPI-linked credit card” for MSMEs may be delayed since it requires larger inter-ministerial deliberations, according to sources. Furthermore, the notion of establishing an uniform set of standards for the two cards — MCC and Vyapar Credit Card (VCC) — with shared goals has been postponed, they noted.
The MSME ministry had already enlisted Sidbi to introduce the VCC as an incentive for units that register on its Udyam site. The measure was intended to push more small enterprises into formalisation.
Sidbi’s planned VCC includes features like as interest-free credit for 20-50 days and a Mudra loan facility. It also recommends up to 85% coverage under the credit guarantee fund managed by the National Credit Guarantee Trustee Company, which is part of the Department of Financial Services (DFS).
The Indian Banks’ Association (IBA) is developing the MCC framework, with strong participation from the DFS and the Reserve Bank of India (RBI). According to one source, the ministries of commerce and industry, as well as the MSME, are all participating in this extensive endeavour.
“Given its numerous aspects, the VCC will require large-scale debates, which will take time. As a result, the IBA has been directed to proceed with its MCC plan and seek clearance from relevant authorities, including the finance ministry,” according to a source.
Prime Minister Narendra Modi proposed in 2019 a proposal to give traders with loans of up to Rs 50 lakh without any guarantee, as well as a credit card facility and a pension system for small retailers.
The intention to offer such credit card facilities is also part of the government’s wider effort to increase the flow of formal credit to MSMEs, which account for the majority of job creation in the country. According to the World Bank, more than 40% of MSMEs in India do not have access to official sources of credit.
In recent years, MSMEs have been heavily struck by a number of causes, including demonetisation, the implementation of the goods and services tax regime, and, most recently, the pandemic. According to some researchers, the Covid epidemic, in particular, led a huge number of MSMEs to fail.
To mitigate the impact of the pandemic, the government established the Emergency Credit Line Guarantee Scheme (ECLGS) to facilitate guaranteed loans in the wake of the epidemic. In April, it authorised a $808-million (Rs 6,062 crore) loan to revive Covid-affected MSMEs through a World Bank-backed initiative, among other measures.

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