Central government is planning to launch a new ₹5 Lakh Credit Card Scheme for micro enterprises which are registered on the Udyam portal. This new credit card scheme for small and micro businesses is designed to provide working capital for these businesses to manage daily expenses and cash flow issues.
This new scheme is especially beneficial for businesses facing delayed payments and looking for affordable credit solutions.
What is ₹5 Lakh Credit Card Scheme?
₹5 Lakh Credit Card Scheme is a government initiative that allows banks to offer credit cards with a limit of up to ₹5 lakh to micro enterprises that are registered on the Udyam portal. These cards are supported by credit guarantee cover, reducing the risk for banks and lowering the borrowing cost for business owners.
This scheme is being rolled out in response to the challenges faced by micro businesses, especially the cash flow issues caused by payment delays from clients. The government plans to issue 10 lakh such credit cards in the first year.
Also read: Credit Guarantee Scheme for Startups
₹5 Lakh Credit Card Scheme – Highlights
| Feature | Details |
|---|---|
| Scheme Name | Rs. 5 Lakh Credit Card Scheme for Micro Enterprises |
| Maximum Credit Limit | Up to Rs. 5,00,000 |
| Eligibility | Udyam-Registered Micro Enterprises Only |
| Credit Guarantee | Yes (via CGTMSE/CGFMU) |
| Target Rollout (Year 1) | 10 lakh cards |
| Interest-Free Period | 30-45 days |
| Interest Rate after Grace | Expected Lower than Standard Credit Cards |
| Direct Interest Subsidy | No (but backed by credit guarantee to reduce rates) |
| Application Mode | Through Partner Banks (Details Soon) |
| Scheme Launch | Expected by September 2025 |
| Key Sectors Supported | All Udyam-registered micro businesses |
| Customer Safeguards | Financial literacy & customer education included |
Benefits
- Easy Access to Working Capital: Micro businesses can use the credit card for daily operational costs, purchase of raw materials, or paying salaries.
- Credit Guarantee Coverage: Cards are backed by credit guarantee schemes like CGTMSE and CGFMU, reducing risk for both banks and cardholders.
- Lower Effective Interest Rates: While no direct subsidy, the guarantee allows banks to offer credit at more affordable rates after the grace period.
- Interest-Free Period: Businesses get a 30-45 day interest-free window on spends, helping to manage short-term cash needs.
- No Debt Trap: Special emphasis on customer education and safeguards to ensure responsible use and prevent financial stress.
- Dedicated Support: Targeted help for first-time entrepreneurs and those from underrepresented backgrounds.
Also read: Kisan Credit Card Scheme – Apply Online for Rs. 5 Lakh Limit KCC
Eligibility Criteria for ₹5 Lakh Credit Card Scheme
- Must be Registered on Udyam Portal: Only micro enterprises with valid Udyam Registration are eligible.
- Micro Enterprises Only: Businesses must fall under the official micro enterprise category as per MSME norms.
- Active Business Status: The enterprise should be active and operational.
- Compliance: The applicant must comply with all government and banking KYC norms.
Application Process for Rs. 5 Lakh Credit Card Scheme
The official application process will be announced by September 2025, but the general steps will likely include:
- Udyam Registration: Ensure your micro enterprise is registered on the Udyam Portal.
- Contact Your Bank: Approach your bank or check if your bank is participating in the scheme.
- Submit Documents: Provide Udyam Registration certificate, KYC documents, and business proofs as required by the bank.
- Bank Assessment: The bank will process your application, verify eligibility, and issue the credit card after approval.
- Card Activation: On approval, you will receive a credit card with a limit up to Rs. 5 lakh.
- Usage & Repayment: Use the card as per the terms; ensure timely repayment to avoid interest beyond the interest-free period.
FAQs
What is the maximum credit limit under the scheme?
The credit card under this scheme offers a maximum limit of Rs. 5 lakh per eligible micro enterprise.
Is there any direct interest subsidy?
No, there is no direct subsidy. However, the credit guarantee coverage is expected to lower interest rates.
Who can apply for the scheme?
Any micro enterprise registered on the Udyam portal can apply.
Will there be customer support and education?
Yes, the scheme will include financial literacy and guidance to help business owners use the credit card responsibly.
When will the scheme launch?
The scheme is expected to be launched by September 2025.