The Union cabinet has allowed all Non-Banking Financial Companies (NBFCs) to provide discount loans to Micro, Small and Medium Enterprises (MSMEs) against dues from government departments, through the TReDS platform.

Earlier, only a selected NBFCs and banks were on the platform which could give the discount loans to MSMEs.

Briefing the media on the cabinet decisions on Wednesday, Union Information and Broadcasting Minister Prakash Javadekar said that the decision has been taken to improve the liquidity flow to the MSMEs.

"The latest move has been aimed towards easing the liquidity flow during such delays. It is one among the series of the measures taken by the government to ease the cash flow", he said.

He also noted that MSMEs get their dues on the bills generated from government departments and agencies after 90 days which creates liquidity issues.

Earlier in the day, the Union Government also launched the Credit Guarantee Scheme for Subordinate Debt (CGSSD) 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.