New initiatives aim to ease working capital constraints, strengthen India’s export ecosystem
Mumbai (Economy India): State-owned Union Bank of India on Monday announced the launch of two new collateral-free export credit schemes, aimed at significantly improving access to finance for exporters, particularly micro, small and medium enterprises (MSMEs).
The two schemes — Union Niryat Sugam and Union Niryat Protsahan Yojana — are designed to address exporters’ working capital requirements, offering funding of up to ₹80 crore without the need for collateral.
The move comes at a time when India is pushing to strengthen its export competitiveness amid global trade uncertainties, currency volatility, and tightening liquidity conditions for small businesses.
Addressing a Long-Standing Export Finance Challenge
Exporters, especially MSMEs, often struggle with timely access to credit due to high collateral requirements, delayed payments, and fluctuating global demand. By introducing these collateral-free schemes, Union Bank aims to reduce financial bottlenecks and enable exporters to focus on scaling operations and exploring new markets.
According to the bank, the schemes are structured to provide simplified access, faster approvals, and flexible repayment options, aligning with the government’s broader goal of making India a global export hub.
Key Features of the New Export Credit Schemes
Union Niryat Sugam
This scheme is targeted at small and mid-sized exporters who require quick and hassle-free access to export finance.
Highlights:
- Collateral-free export credit
- Simplified documentation process
- Faster loan sanction and disbursal
- Designed primarily for MSME exporters
- Supports both pre-shipment and post-shipment finance
Union Niryat Protsahan Yojana
This scheme is aimed at larger and growth-oriented exporters with higher working capital needs.
Highlights:
- Credit support up to ₹80 crore
- No collateral requirement
- Competitive interest rates
- Enhanced liquidity support for bulk export orders
- Suitable for exporters expanding into new international markets
Why This Matters for India’s Export Economy
India’s export sector plays a critical role in employment generation, foreign exchange earnings, and economic resilience. However, access to affordable credit has remained a key constraint, particularly for smaller exporters.
By removing the collateral barrier, Union Bank’s new schemes are expected to:
- Improve cash flow for exporters
- Reduce dependence on informal credit
- Encourage new exporters to enter global markets
- Support India’s “Make in India” and “Export from India” initiatives
Supporting MSMEs at the Core
MSMEs contribute nearly 40% of India’s exports, yet they remain vulnerable to credit shortages. Industry experts believe that collateral-free export finance can be a game changer for these businesses.
With these schemes, exporters can:
- Finance raw material procurement
- Manage logistics and shipping costs
- Absorb payment delays from overseas buyers
- Invest in quality upgrades and compliance requirements
Union Bank’s Strategic Focus on Trade Finance
Union Bank of India has been steadily expanding its trade finance portfolio, aligning with national priorities such as:
- Boosting non-oil exports
- Expanding India’s presence in emerging markets
- Strengthening MSME-led growth
The launch of these schemes reflects the bank’s commitment to innovation in banking products and inclusive growth.
Industry Response and Outlook
Exporters and trade bodies have welcomed the move, noting that collateral-free credit could significantly reduce operational stress, especially during periods of global slowdown.
Analysts expect other public and private sector banks to follow suit, increasing competition and improving credit availability across the export ecosystem.
As global supply chains diversify and India positions itself as a reliable manufacturing and export destination, access to flexible export finance will be a critical enabler.
What Lies Ahead
With India targeting ambitious export growth in the coming years, banking support through such tailored financial products will be crucial. If effectively implemented, Union Niryat Sugam and Union Niryat Protsahan Yojana could play a pivotal role in empowering exporters and strengthening India’s trade balance.
(Economy India)
