Govt to soon clear Rs 10,000-cr 'Fund of Funds' for MSMEs with high credit rating: Union minister Nitin Gadkari

New Delhi: A Rs 10,000 crore “Fund of Funds” will soon be approved by the government to buy up to 15 percent equity in MSMEs with a high credit rating that want to list on stock exchanges and raise money from the capital markets, Union Minister Nitin Gadkari said on Wednesday. He also said a separate scheme was being formulated for according credit rating to MSMEs based on their annual turnover, exports and GST payments, and that the National Small Industries Corporation or another government body will control the Fund of Funds.

.@nitin_gadkari says govt to soon unveil fund of funds for MSME of Rs 10,000 Cr. MSME Min to seek Cabinet nod for the fund. Finance Min approved the creation of fund. Fund to be used to assist MSMEs with good credit rtg. Credit rtg to depend on track record of I-T, GST returns pic.twitter.com/RCAMGFA2mN

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He said the government wants the Fund’s corpus to be utilised by micro, small and medium enterprises (MSMEs) having AAA rating. The AAA rating implies high credit worthiness. “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 the minister for MSMEs. Gadkari said up to 15 percent of the amount an AAA-rated MSME raises from the capital market will be contributed by the government through the Fund as equity. The minister said he was expecting Cabinet clearance for the Fund soon and will implement it immediately upon approval. Interacting with members from the PHD Chamber of Commerce and Industry via video conference, Gadkari exhorted India Inc to also consider the financial condition of the government and banks while placing forth their demands, amid the coronavirus-induced economic crisis. “The government is also facing a financial crisis. Some state governments do not have enough money to pay salaries to staff next month. The situation of banks is also challenging in terms of their survival,” said the minister, emphasising the need to strike an equilibrium to ensure everyone’s survival.