The Cabinet on Wednesday allowed all non-banking financial companies to provide discount loans to MSMEs against dues from government departments, through the TReDS platform.
So far only a selected NBFCs and banks were on the platform and could give the discount loans to MSMEs.
Briefing the media on the cabinet decisions, Union Information and Broadcasting Minister Prakash Javadekar said that the decision has been taken to improve the liquidity flow to the MSMEs.
He noted that MSMEs get their dues on the bills generated from government departments and agencies after 90 days which creates liquidity issues and the latest move has been aimed towards easing the liquidity flow during such delay.
Cash flow and liquidity have been a major concern for micro, small and medium enterprises amid the pandemic and the latest decision is one among the series of the measures taken by the government to ease the cash flow.
Earlier in the day, the Union Government also launched the Credit Guarantee Scheme for Subordinate Debt for MSMEs, thereby operationalising the Rs 20,000 crore distressed assets fund.
The MSME Ministry issued guidelines for the scheme which was announced under the Aatmanirbhar Bharat economic package.