- New Rs 5 lakh credit card scheme to support Udyam-registered micro enterprises with working capital needs.
- Credit guarantee coverage lowers borrowing costs and helps manage interest rates effectively.
- Government focuses on financial literacy and safeguards to help micro businesses avoid debt traps.
Government has introduced a new Rs 5 lakh credit card scheme for micro enterprises registered on the Udyam portal, aimed at easing their working capital problems. This financial product is made to help small businesses manage cash flow issues by giving access to affordable credit, which can boost productivity and keep operations steady.
Who Can Apply and Benefits of the Rs 5 Lakh Credit Card Scheme
This scheme is open to micro enterprises officially registered on the Udyam platform. These businesses can apply for a credit card with a limit of up to Rs 5 lakh. The main benefits include quick access to funds, easier handling of working capital gaps, and less risk for lenders since the credit comes with government-backed guarantees.
Main Features of the Credit Card Scheme for Micro Enterprises
This credit card scheme includes credit guarantee coverage—a first for this type of product—that protects banks and helps bring down borrowing costs. After an interest-free grace period of 30–45 days, the effective interest rates are expected to be lower than usual market rates, making it easier for micro enterprises to repay. The repayment terms are flexible to match your business’s cash flow, helping you avoid getting stuck in debt.
How Micro Enterprises Can Apply
You can apply for the credit card by visiting banks that take part in this scheme. The process requires you to provide your Udyam registration details, business documents, and fill out required forms. Banks will check your eligibility and approve credit cards accordingly. The government plans to issue one million such credit cards in the first year, so it’s a good idea to apply early to benefit.
How Costs and Interest Rates Are Managed
Thanks to credit guarantee coverage, the scheme lowers the risks for lending banks, which lets them offer lower interest rates than standard credit cards. While there are no direct interest subsidies, existing credit guarantee systems like CGTMSE and CGFMU will work together to keep costs manageable. This gives your business access to affordable credit without putting extra strain on your finances.
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Government’s Role in Financial Education and Support
The government knows that many micro enterprises might not be familiar with financial details, so they are focusing on educating customers. Clear information about credit card terms, interest rates, and repayment duties will be provided. Measures are in place to prevent misuse and financial problems. These efforts aim to help you make smart financial choices and protect your business.
How This Scheme Helps Your Cash Flow and Productivity
Micro enterprises often wait up to 90 days for payments, which can cause serious cash flow problems. This scheme fixes that by giving instant credit access, helping you cover your daily expenses and pay your staff on time. Having more working capital will boost productivity in important sectors like leather and footwear, helping your business grow and compete better.
| Feature | Details |
|---|---|
| Credit Limit | Up to Rs 5 lakh |
| Eligible Beneficiaries | Udyam-registered micro enterprises |
| Credit Guarantee Coverage | Yes, to reduce lender risk |
| Interest-free Period | 30–45 days |
| Interest Rate Post Grace | Lower than market rates due to scheme support |
| Application Through | Participating banks |
| Rollout Timeline | Expected launch by September 2025 |
Keep an eye out for official updates and get your application ready early to benefit from this new credit option made especially to help your business grow.