In a bid to support the MSME sector, Union Minister Nitin Gadkari has announced the setting up of Rs. 10,000 crore ‘Fund of Funds’, which is slated for approval from the Government soon.
The fund will be directed to buying up to 15 per cent equity in MSMEs with high credit rating looking to list on stock exchange and raise funds from the capital markets. The National Small Industries Corporation or a similar government body will be given the charge of the Fund of Funds.
In addition to the fund, Gadkari has spoken about setting up a scheme to determine the credit rating of MSMEs based on their turnover, value of exports and GST payments.
The MSMEs that are granted only the AAA rating, which is the highest level of creditworthiness, will be able to benefit from the fund.
The plan is to contribute up to 15 per cent of the amount the MSME is looking to raise through the fund as equity. The imminent fund is expected to be cleared by the Cabinet soon for immediate implementation.
“We have submitted a proposal for a Fund of Funds of Rs. 10,000 crore which has been approved by the Finance Ministry. It is going to be placed before the Cabinet and will soon be cleared,” said Nitin Gadkari in a statement.
Gadkari has also expressed that the State Government is under duress during the time of crisis and many will be unable to pay their staff’s salaries next month. He further talked about the formal sector of the Government striking a balance in their demands as both the Central Government and banks face financial shortages.