MSME Credit Cards: How the Budget 2025 initiative will transform small businesses | Mint

Micro, Small and Medium Enterprises (MSMEs) have been provided with new credit cards in the Budget 2025 by the Finance Minister Nirmala Sitharaman. This is considered as a significant financial change as per experts, according to a detailed report by ANI.

MSME credit card scheme

Announced to the citizens during the budget speech of the Finance Minister of India, Nirmala Sitharaman, this particular initiative aims towards issuing 10 lakh credit cards to micro enterprises, each with a limit of ₹5 lakhs.

The FM further stated in her speech that there are over 1 crore registered MSMEs, employing 7.5 crore people currently. They are contributing in generating 36% of the nation’s manufacturing. These MSMEs have positioned India as a global manufacturing hub, with 45% of our exports coming from them.

The ANI report further added that, according to experts this move will enhance financial inclusion and alleviate liquidity challenges faced by small businesses.

Expert views 

Market participants and industry leaders have all hailed the initiative. For instance, Jyoti Prakash Gadia of Resurgent India has termed the initiative as a ‘game changer’ for micro enterprises, especially the ones registered on Udyam portal. This initiative is expected to relax working capital limitations of micro firms and provide much desired financial inclusion.

Budget has increased the credit guarantee cover for micro enterprises to up to ₹10 crore

It is also important to understand that the budget has enhanced the credit guarantee cover for micro-enterprises from the earlier ₹5 crore to ₹10 crore now. This single step will ensure the generation of ₹1.5 lakh crores in additional credit over the next five years.

It is going to  help small finance banks, NBFCs, and loan distributing agencies immensely. Some leading NBFCs of India are CreditAccess Grameen, Manappuram Finance, Five Star Business Finance among others. 

Still, experts believe that simply introducing these cards will not be enough. Mukul Goyal, Co Founder of Startefix, elaborated the importance of streamlining the loan distribution process, primarily to ensure timely access to credit for MSMEs.

Importance of reduction in bureaucratic hurdles

He further pointed out the importance of reducing bureaucratic hurdles. If things are made easier it will help in ensuring that the financial benefits of these credit cards, easy loan facilities along with associated services will reach the grassroots of businesses effectively.

Further, the focus of the central government on technology adoption, along with targeted support for specific sectors such as leather and toys is anticipated to boost competitiveness in the market and also expand global market reach for MSMEs. Thus, resulting in overall expansion and growth in the sector.

Therefore, to conclude it is clear that the government is willing to lay a strong foundation for MSME growth and expansion. Still, its success hinges on properly planned execution of ideas and goals.

The overall objective hence should be to provide for easily accessible capital for MSMEs and ensure that proper education regarding the same is disseminated to the masses at large, through officially designated sources. These steps are bound to help the nation immensely by providing ways of constructive dialogue and financial inclusion for participants.

(Note: Using a credit card carries its own set of risks)