Is MSME Loan Interest Free?

To boost MSME (Micro, Small and Medium Enterprises) sector in the country, many banks and financial institutions have introduced various loan schemes for MSMEs. Many such lenders also offer special incentives to MSMEs because of their limited access to credit and higher risk profile associated with this segment. However, most of these loans come with caveats that restrict the borrower from using them in a certain way. Some banks offer interest-free loans to MSMEs on the condition that they cannot charge their customers an interest rate above a fixed threshold. These special conditions restrict the borrower’s ability to expand its […]