In a move to provide emergency credit support to MSMEs impacted by coronavirus lockdown, the government has operationalised Rs 20,000 crore stressed fund which is likely to benefit around 2 lakh medium and small entrepreneurs. The government has issued guidelines for Credit Guarantee Scheme for Subordinate Debt (CGSSD) which is a part the Rs 20.97 lakh crore Aatma Nirbhar Bharat Abhiyan package announced by Prime Minister Narendra Modi.
Taking to Twitter, Ministry of Micro, Small and Medium Enterprises (MSME) on Wednesday announced that the central government has launched subordinate debt scheme to provide financial facility to stressed MSMEs.
"Govt. has given yet another facility for financially stressed MSMEs. The sub-debt scheme has been launched. All preparation is done. All PSU Banks and some Pvt Banks are on board. Contact your bank & be #msmetochampions. @FinMinIndia @DFS_India @CGTMSEOfficial," Ministry of MSME said.
Govt. has given yet another facility for financially stressed MSMEs. The sub-debt scheme has been launched. All preparation is done. All PSU Banks and some Pvt Banks are on board. Contact your bank & be #msmetochampions. @FinMinIndia@DFS_India@CGTMSEOfficialAugust 19, 2020
The objective of the scheme is to help MSMEs with growth potential at a time when they are facing severe shortage of equity and low revenues. It seeks to extend support to the promoters of the operational MSMEs which are stressed and have become NPA as on April 30, 2020. The promoters of the MSME unit will be given credit equal to 15 percent of stake in the company or Rs 75 lakh, whichever is lower.
As per the latest norms, this scheme seeks to extend support to MSMEs whose accounts have been standard as on March 31, 2018, and have been in regular operations, either as standard accounts, or as NPA accounts during financial year 2018-19 and 2019-20. Fraud/willful defaulter accounts will not be considered under the proposed scheme.
The scheme is valid for stressed MSME units which were SMA-2 and NPA as of April 30, 2020, who were eligible for restructuring as per RBI guidelines on the books of the lending institutions. The apex bank has asked banks to recognise incipient stress in loan accounts, by classifying such assets as special mention accounts (SMA), before it becomes an NPA. SMA has been categorised as SMA-0, SMA-1 and SMA-2 accounts based on the period of overdue amount. SMA-0 are those accounts in which loan repayments are wholly or partly overdue for a period of up to 30 days, SMA-1 for period between 31 and 60 days, and SMA-2 for 61-90 days.
The Reserve Bank of India, in its second bi-monthly monetary meet held on August 6, also announced extension of the provision of restructuring of MSMEs loans for borrowers with loan upto Rs 25 crore as on March 1, 2020.
By Chitranjan Kumar