MSMEs alert! Rs 20,000 crore- Modi government launches another funding scheme | All details here
In yet another boost to MSMEs, Modi government-led Ministry of Micro, Small and Medium Enterprises (MSMEs) has launched one more funding scheme to help the distressed sector.
In yet another boost to MSMEs, Modi government-led Ministry of Micro, Small and Medium Enterprises (MSMEs) has launched one more funding scheme to help the distressed sector. Minister of MSME, Nitin Gadkari has launched the Credit Guarantee Scheme for Sub-ordinate Debt (CGSSD) which is also called “Distressed Assets Fund–Sub-ordinate Debt for MSMEs”. As per the Scheme, the guarantee cover worth Rs. 20,000 crore will be provided to the promoters who can take debt from the banks to further invest in their stressed MSMEs as equity.
CGSSD Scheme: Distressed Assets Fund–Sub-ordinate Debt for MSMEs - The highlights of the scheme are:
-This Scheme seeks to extend support to the promoter(s) of the operational MSMEs which are stressed and have become NPA as on 30th April, 2020;
-Promoter(s) of the MSMEs will be given credit equal to 15% of their stake (equity plus debt) or Rs. 75 lakh whichever is lower;
-Promoter(s) in turn will infuse this amount in the MSME unit as equity and thereby enhance the liquidity and maintain debt-equity ratio;
-90% guarantee coverage for this sub-debt will be given under the Scheme and 10% would come from the concerned promoters;
-There will be a moratorium of 7 years on payment of principal whereas maximum tenor for repayment will be 10 years.
"It was being felt that the biggest challenge for stressed MSMEs was in getting capital either in the form of debt or equity. Therefore, as part of Atmanirbhar Bharat package, on 13th May, 2020, Finance Minister had announced this scheme of sub-ordinate Debt to the promoters of operational but stressed MSMEs. After completion of necessary formalities including approval of CCEA and consultation with Finance Ministry, SIDBI and RBI among others, the scheme was formally launched by Gadkari from Nagpur," Ministry of Micro, Small & Medium Enterprises said in a statement.
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