Title: What is the Credit Guarantee Scheme for Subordinate Debt of MSMEs introduced by the Ministry of MSME? How can I benefit from it?
1Udyam Registration
- https//www.udyam-registration.co.in/
2What is the Credit Guarantee Scheme for
Subordinate Debt of MSMEs introduced by the
Ministry of MSME? How can I benefit from it?
3(No Transcript)
4The Ministry of MSME has introduced the Credit
Guarantee Scheme for Subordinate Debt for
stressed MSMEs (hereafter called as 'the scheme')
on 24th June 2020 with a view to support MSMEs
who have been stressed with the current difficult
times. The scheme has been introduced with a sole
objective of facilitating loans through Banks to
the promoters of stressed MSMEs in order to help
them infuse more equity/capital into their
business. Such businesses must be eligible for
restructuring under the RBI guidelines in order
to be able to avail these benefits. The ministry
has laid down some pre-requisites as well as
guidelines as to how any MSME can avail the
benefits under this scheme. Let's break them into
the below FAQs
5- How can an MSME become eligible for this scheme?
Which MSMEs are eligible to avail benefits under
this scheme? - An MSME who is declared stressed after required
evaluation from the lending institution and the
MSME who is eligible for restructuring as per the
RBI guidelines are eligible to avail benefits
under this scheme. - MSMEs need to make sure that their accounts have
been standard as of 31st March 2018 and they have
been operational throughout the financial years
of 2018-19 2019-20 only are eligible under this
scheme. - The MSMEs should be declared stressed under SMA2
NPA accounts as of 30th April 2020. - MSMEs whose accounts are declared as willful
defaulters or fraud are not eligible to avail
benefits under this scheme. - MSMEs who have obtained their Udyam
Registration are only allowed to avail benefits
under this scheme. - Till 31st March 2022, MSMEs who have their Udyog
Aadhar or Udyog Aadhar Memorandum are also
eligible to avail these services.
6- How much loan can be availed by any MSME under
this scheme? What are the guidelines for loan
amount eligibility? - Under this scheme the loan amount is capped at
15 of the total equity of the promoter in his
MSME or Rs. 75 lakhs whichever is lower as per
their last audited balance sheet.For example If
a promoter has invested Rs. 1 Crore as equity or
debt in his MSME then the loan eligibility amount
will be 15 of 1 crore i.e. Rs. 15 lakhs. - It can be noted that not only equity but debt is
also considered into total investment by any
promoter in their MSME. - Further, it needs to be noted that out of this
eligible amount of sub-debt only 90 is
guaranteed under this scheme. To be able to avail
this sub-debt finance the promoter needs to bring
in 10 themselves as restructuring finance.
7What is the tenure of loan under this scheme? For
how long will this scheme be in effect? The
tenure of loan is 10 years from date of availing
the loan or 31st March 2021, whichever is
earlier. The ministry plans to have this scheme
into effect until a total amount of Rs. 20,000
Crore is approved as guarantee. What about the
interest rate? Will it be capped? The interest
rate at which the restructuring finance is
provided will be capped. The interest rate will
be decided as per RBI guidelines by the
participating Scheduled Commercial Bank at the
time of disbursement.
8What if the unit whose accounts were declared NPA
has now closed down operations? Is it still
eligible to obtain the benefits under this
scheme? Sadly, the answer is NO. The main
requirement under this scheme is that the MSME
needs to be operational and running at the time
of application. It needs to prove it the promoter
has vested interest in the MSME and has tried his
best to keep the MSME running in difficult
conditions. Which financial institutions are
allowed to provide the benefits under this
scheme? Can a NBFC also provide loans under this
scheme? Currently only Scheduled Commercial
Banks are provided access to disbursing benefits
under this scheme. No other financial institution
can avail the guarantee under this scheme.