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Regular repayment of loans to be incentivized
Scheme will help small businesses brace the disruption caused due to COVID-19

Union Cabinet chaired by Prime Minister Shri Narendra Modi today approved approved a scheme for interest subvention of 2% for a period of 12 months, to all Shishu loan accounts under Pradhan Mantri Mudra Yojana (PMMY) to eligible borrowers.

The scheme will be extended to loans which meet the following criteria - outstanding as on 31st March, 2020; and not in Non-Performing Asset (NPA) category, as per Reserve Bank of India (RBI) guidelines, on 31st March 2020 and during the period of operation of the Scheme.

The interest subvention would be payable for the months in which the accounts are not in NPA category including for the months that the account becomes a performing asset again, after turning NPA. The scheme will incentivize people who will make regular repayments of loans.

The estimated cost of the Scheme would be approximately Rs. 1,542 crore which would be provided by the Government of India.

Background

This Scheme is for implementation of one of the measures relating to MSMEs, announced under the Atma Nirbhar Bharat Abhiyan. Under PMMY, loans for income generating activities up to Rs. 50,000 are termed as Shishu loans. PMMY loans are extended by Member Lending Institutions viz. Scheduled Commercial Banks, Non Banking Finance Companies and Micro Financial Institutions, registered with Mudra Ltd.

The ongoing COVID-19 crisis and the consequent lockdown has led to severe disruption of business for micro and small enterprises which are funded through Shishu Mudra loans. Small businesses typically function on thin operating margins, and the current lockdown has had a severe impact on their cash flows, jeopardizing their ability to service their loans. This could lead to default in repayment and have a resultant impact on access to institutional credit in future.

As on 31st March 2020, about 9.37 crore loan accounts under the Shishu category of PMMY with a total loan amount of about Rs 1.62 Lakh crore, were outstanding.

Implementation strategy

The Scheme will be implemented through the Small Industries Development Bank of India (SIDBI) and will be in operation for 12 months.

For borrowers, who have been allowed a moratorium by their respective lenders, as permitted by RBI under the ‘COVID 19 Regulatory Package’, the Scheme would commence post completion of the moratorium period till a period of 12 months i.e. from September 01, 2020 till August 31, 2021. For other borrowers, the scheme would commence w.e.f. June 01, 2020 till May 31, 2021.

Major Impact

The Scheme has been formulated as a specific response to an unprecedented situation and aims to alleviate financial stress for borrowers at the ‘bottom of the pyramid’ by reducing their cost of credit. The Scheme is expected to provide much needed relief to the sector, thereby enabling small businesses to continue functioning without laying off employees due to lack of funds.

By supporting small businesses to continue functioning during these times of crisis, the Scheme is also expected to have a positive impact on the economy and support its revival, which is necessary for employment generation in future.

 

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Prime Minister’s Departure Statement ahead of his visit to Rome and Glasgow
October 28, 2021
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I will be visiting Rome, Italy and the Vatican City, at the invitation of H.E. Prime Minister Mario Draghi, following which I will travel to Glasgow, United Kingdom from 1-2 November 2021 at the invitation of H.E. Prime Minister Boris Johnson.

In Rome, I will attend the 16th G20 Leaders’ Summit, where I will join other G20 Leaders in discussions on global economic and health recovery from the pandemic, sustainable development, and climate change. This will be the first in-person Summit of the G20 since the outbreak of the pandemic in 2020 and will allow us to take stock of the current global situation and exchange ideas on how the G20 can be an engine for strengthening economic resilience and building back inclusively and sustainably from the pandemic.

During my visit to Italy, I will also visit the Vatican City, to call on His Holiness Pope Francis and meet Secretary of State, His Eminence Cardinal Pietro Parolin.

On the sidelines of the G20 Summit, I will also meet with leaders of other partner countries and review the progress in India’s bilateral relations with them.

Following the conclusion of the G20 Summit on 31 October, I will depart for Glasgow to attend the 26th Conference of Parties (COP-26) to the United Nations Framework Convention on Climate Change (UNFCCC). I will be participating in the high-level segment of COP-26 titled ‘World Leaders’ Summit’ (WLS) on 1-2 November, 2021 along with 120 Heads of States/Governments from around the world.

In line with our tradition of living in harmony with nature and culture of deep respect for the planet, we are taking ambitious action on expanding clean & renewable energy, energy efficiency, afforestation and bio-diversity. Today, India is creating new records in collective effort for climate adaptation, mitigation and resilience and forging multilateral alliances. India is among the top countries in the world in terms of installed renewable energy, wind and solar energy capacity.At the WLS, I will share India’s excellent track record on climate action and our achievements.

I will also highlight the need to comprehensively address climate change issues including equitable distribution of carbon space, support for mitigation and adaptation and resilience building measures, mobilization of finance, technology transfer and importance of sustainable lifestylesfor green and inclusive growth.

COP26 Summit will also provide an opportunity to meet with all the stakeholders including leaders of partner countries, innovators and Inter-Governmental Organization and explore the possibilities for further accelerating our clean growth.