Credit card scheme soon for MSMEs

New Delhi: The government is giving the final shape to a Merchant Credit Card (MCC) Scheme for traders and a Vyapar Credit Card (VCC) for microunits, in a move aimed at giving them further credit support, officials in the know said. While the VCC may offer an interest-free credit period of up to 50 days and an around 85% coverage under the Credit Guarantee Fund for Micro Units, the MCC scheme may offer loans to merchants at a subsidised interest rate, similar to the Kisan Credit Card.

“The MCC scheme will provide flexibility to the banks to align their product with their board-approved policies,” said a government official. Small Industries Development Bank of India is working out the details for the VCC, which is aimed as an incentive for units getting registered on the Udyam Portal, the official added.

Another official said the idea is to incentivise nano-MSMEs such as roadside vendors and kiranas, and help them enter the formal financial system. “There should be uniformity in card benefits for each group of MSMEs as the existing MSME cards vary in their terms,” he added.

ET had reported in April that a parliamentary standing committee on finance headed by Jayant Sinha had pitched for providing a credit card to MSME entrepreneurs on the lines of the Kisan Credit Card.

The government plans to provide short-term credit at low interest rate to MSMEs for their working capital needs to ensure certainty in credit flow amid a slowing global economy. There are 63 million MSMEs in the country, providing 110 million jobs.