Credit cards turn out to be beneficial for MSME, money will be withdrawn easily; Know how to get benefit

Many announcements have been made for MSME in the budget presented in Parliament on Saturday. It talked about the introduction of credit cards for MSMEs. It is believed that it can prove to be a game changer in the field of MSME. Under the new announcement, one is to issue 10 lakh credit cards to micro-enterprises, each with a limit of Rs 5 lakh.

Sun, 02 Feb 2025 07:36 PM (IST)
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Credit cards turn out to be beneficial for MSME, money will be withdrawn easily; Know how to get benefit
Credit cards turn out to be beneficial for MSME, money will be withdrawn easily; Know how to get benefit

The introduction of credit for micro, small, and medium enterprises (MSMEs) is a chance for transformation, and it will make finance accessible with ease. As per observers in the industry, however, disbursement of loans will have to become easier for financial gain to trickle down to companies.

The Union Budget 2025 saw a significant boost in acceptance in MSME sectors for its financial support, its push towards digitization, and its sector-wise programs. One of its most important announcements could possibly be issuing 10 lakh micro-enterprise credit cards with a Rs 5 lakh limit per card.

Industry players say the move will enhance financial inclusion and ease liquidity challenges for small businesses. Jyoti Prakash Gadia, managing director of Resurgent India, called the credit card initiative for micro-enterprises registered on the Udyam portal a game changer.

He said financial access remains a challenge for small businesses and the move will ease their working capital constraints to a great extent.

He said the announcement of 10 lakh credit cards for micro-enterprises with a limit of Rs 5 lakh is a big boost for the availability of much-needed finance for enterprises registered in the Udyam portal. Additionally, the budget has increased the credit guarantee cover for micro-enterprises from Rs 5 crore to Rs 10 crore. The move is expected to lead to additional credit of Rs 1.5 lakh crore over the next five years.

Despite these positive moves, industry players say ensuring timely access to credit remains a challenge. Mukul Goyal, co-founder of Stratafix Consulting, has pointed out the need to reduce bureaucratic hurdles in the loan disbursal process. Goyal said that these measures are promising, but it is important to address the persistent challenges faced by MSMEs. Access to timely and affordable credit remains a barrier for many small businesses.

It is worth noting that under MSME, there is a facility to give a loan of Rs 3 lakh to micro-entrepreneurs. However, from now onwards, those who are registered on the Udyam portal will be able to get a credit card with a limit of Rs 5 lakh. The government plans to issue 10 lakh such credit cards.

Muskan Kumawat Journalist & Writer