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Indian Bank is prepared to extend loans to micro, small, and medium enterprises (MSMEs) in the Special Mention Account (SMA) category, following the government guarantee introduced by the finance minister in the Union Budget 2024, said Managing Director and CEO Shanti Lal Jain in an exclusive interview.
“We’re up for anything. We are open since we are a bank and know that our customers have a history with us. We are lending to our consumers under SMA 1 or SMA 2,” Jain stated, citing the government’s announcement that these two groups would be eligible for the guarantee.
In her Union Budget 2024, Finance Minister Nirmala Sitharaman introduced a new mechanism to ensure the continued provision of bank credit to MSMEs during periods of stress. When MSMEs reach the’special mention account’ (SMA) stage due to circumstances beyond their control, they require credit to sustain their operations and prevent falling into non-performing asset (NPA) issues.
According to Finance Sitharaman’s budget address, credit availability will be backed by a guarantee from a fund that is sponsored by the government.
She continued by saying that rather than depending on outside evaluation, state-owned institutions will strengthen their internal capacity to evaluate MSMEs for credit. “They will also lead in developing or getting developed a new credit assessment model based on the scoring of the digital footprints of MSMEs in the economy.”
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