RAMP and its impact on MSMEs

The pandemic affected small businesses and financially disrupted many lives. To ward off these repercussions, the Government of India announced the Raising and Accelerating MSME Performance (RAMP) programme in partnership with World Bank. Read on to know about this program and how it can benefit MSMEs in India.

What is the RAMP programme?

The RAMP programme aims to offer financial aid to MSMEs affected by COVID-19. The project has been announced in partnership with the World Bank and is expected to boost the productivity of the MSME sector for the next five years, starting from the financial year 2022 up to the financial year 2026.

The scheme was announced after the UK Sinha Committee published a report in June 2019 that noted that MSMEs could benefit from new financial reforms. The World Bank has agreed to contribute Rs. 3,750 crore under the Credit Linked Capital Subsidy and Technology Upgradation Scheme. However, the scheme’s total cost is estimated at Rs. 6,062.45 crore. These funds can help MSMEs access credit in an affordable manner to grow and expand their businesses with better ease.

Why was RAMP set up?

The World Bank noted that 40% of MSMEs in India out of a total of 58 million do not have access to a formal source of credit. Hence, RAMP has been set up to target the credit needs of MSMEs, especially to make the sector more productive and competitive after the COVID-19 pandemic. After the success of the World Bank’s first programme, the Emergency Response Program that sourced around Rs 5,600 crore and was signed in June 2020 with the Indian government, RAMP is the second attempt on the part of the international bank along with the Indian government.

How can RAMP help MSMEs?

RAMP is set to start in five states in the country, including Tamil Nadu, Punjab, Gujarat, Maharashtra, and Rajasthan. These states contain 54% of India’s MSMEs. The scheme will focus on improving the credit and liquidity needs of small businesses by incentivising banks and non-banking financial companies (NFBCs) to offer loans to MSMEs. The first programme had helped approximately 50 lakh companies get finances as of June 4, 2021. The second programme hopes to benefit more companies.

An estimated 1.5 million MSMEs can benefit from the RAMP programme. Moreover, RAMP can also boost employment, productivity, and skills in the MSME industry. The financing can also help MSMEs concentrate on critical areas like hiring, launching up-to-date and quality products, and sustainable business practices.

In addition to this, the RAMP scheme focuses on another significant area—MSME clusters. These are groups of companies located close to each other, operating in the same sector, and offering the same category of products and services. Clusters can boost the MSME sector’s revenue, but they remain largely unexplored in India.

The 3,750-crore loan from World Bank has a maturity period of 18.5 years. This is inclusive of a grace period of 5.5 years. The next five years are surely going to be an excellent opportunity for India’s MSMEs to recover from the losses of the pandemic and grow further.

If you are a micro or small business owner seeking additional financing, HDFC Bank has numerous customised solutions to help you. You can also apply for a Working Capital Loan to get started. For further details, reach out to your Relationship Manager or visit the closest branch to know more.

Click here to apply for your loan now!

Read more about applying for a Covid 19 small Business Loan here.

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. All loans for MSMEs, at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.