Friends, As you know during the lock down due to COVID-19 pandemic, our Honorable Prime Minister Shri Narendra Modi has given a slogan i.e. Vocal for Local and given his focus to make India self reliant.
To achieve the self reliant, the country should focus in Make In India. Unless and until our production/manufacturing power increases, we can't be self reliant.
There are many people in our country who are having knowledge and new ideas and wish to start their own business but due to lack of financial support restrict them for doing so.
Here I came with a new scheme of Government of India which is promoted by the SIDBI( Small Industrial Development Bank of India).
The name of the scheme is "SIDBI Make in India Soft Loan Fund for Micro Small and Medium Enterprises".(SMILE).
The objective of the Scheme is to provide soft loan, in the nature of quasi-equity and term loan on relatively soft terms to MSMEs to meet the required debt-equity ratio for establishment of an MSME as also for pursuing opportunities for growth for existing MSMEs.
Emphasis will be on covering new enterprises in the manufacturing as well as services sector.The emphasis will however, be on financing smaller enterprises within MSME
Existing enterprises undertaking expansion, to take advantage of new emerging opportunities, as also undertaking modernization, technology up gradation or other projects for growing their business will also be covered
CREDIT GUARANTEE SCHEME FOR SUBORDINATE DEBT
(CGSSD)
Ministry of Micro, Small and Medium Enterprises, has framed a Scheme for the purpose of
providing guarantees in respect of credit facilities extended by eligible and registered
scheduled commercial banks to borrowers in Micro, Small and Medium Enterprises
(MSMEs). The scheme will be operationalized through a special window created for this
purpose under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
Details of the scheme are as under: The Scheme is named as ‘Distressed Assets Fund - Subordinate Debt for Stressed MSMEs’
and the credit product for which guarantee would be provided under the Scheme shall be
named as ‘Credit Guarantee Scheme for Subordinate Debt (CGSSD)’(hereinafter referred as
the ‘Scheme’)
Purpose of the Scheme:
To provide guarantee coverage for the CGSSD to provide Sub-Debt support in respect of
restructuring of MSMEs. 90% guarantee coverage would come from scheme/ Trust and
remaining 10% from the concerned promoter(s). The objective of the scheme is to provide
personal loan through banks to the promoters of stressed MSMEs for infusion as equity /
quasi equity in the business eligible for restructuring, as per RBI guidelines for restructuring
of stressed MSME advances.
The Scheme is applicable for those MSMEs whose accounts have been standard as on
31.03.2018 and have been in regular operations, either as standard accounts, or as
NPA accounts during financial year 2018-19 and financial year 2019-20.
Fraud/ Willful defaulter accounts will not be considered under the proposed scheme. Personal loan will be provided to the promoters of the MSME units. The MSME itself
may be Proprietorship, Partnership, Private Limited Company or registered company
etc.
iv. The Scheme is valid for MSME units which are stressed, viz. SMA-2 and NPA accounts
as on 30.04.2020 who are eligible for restructuring as per RBI guidelines on the books
of the Lending institutions.
Loan Amount eligible under the Guarantee Coverage The guarantee coverage will be provided to the eligible borrower for the credit
facilities extended under this scheme. Under this arrangement, promoter(s) of the
MSME unit will be given credit equal to 15 % of his/her stake (equity plus debt) or Rs
75 lakh whichever is lower.
The financial assistance provided as part of the scheme is to be operated as a
separate loan account and the promoter need to infuse the sub-debt / loan amount
as promoter’s contribution in the form of equity (including sub-debt or quasi equity)
into MSME entity.
Any guarantee approved under this scheme shall be over and above the existing loan
/ guarantee sanctioned by the trust (over and above the eligible limit of Rs.200 lakh). In case a borrower has existing limits with more than one lender, the CGSSD can be
availed by the borrower through one lender only. A declaration from the borrower
regarding its other banking arrangements and that it has not availed funding under
the scheme from the other lenders to be obtained by the lending MLI.
Post-restructuring, NPA classification of these accounts shall be as per the extant
IRAC norms.
The tenor of sub-debt facility provided under CGSSD shall be as per the repayment
schedule defined by the lender, subject to a maximum tenor of 10 years from the
guarantee availment date or September 30, 2021 whichever is earlier.
The maximum tenor for repayment will be 10 years. There will be a moratorium of 7
years (maximum) on the payment of principal. Till the 7th year, only interest will be
paid.
The sub-debt facility so sanctioned by MLIs will have 2nd charge of the assets
financed under existing facilities for the entire tenor of the sub-debt facility. Guarantee Fee
i. 1.50% per annum on the guaranteed amount on outstanding basis. Guarantee fee may be borne by the borrowers as per the arrangements between
the borrower and the MLIs.
Extent of the Guarantee Coverage - 90% guarantee coverage would come from scheme/ Trust and remaining 10% from
concerned promoter(s) on the credit extended by MLIs under the scheme.
