Government launches scheme to provide Rs 20,000 crore guarantee cover to 2 lakh MSMEs
New Delhi: Minister of Micro, Small and Medium Enterprises Nitin Gadkari on Wednesday launched Credit Guarantee Scheme for Sub-ordinate Debt (CGSSD) additionally referred to as “Distressed Assets Fund–Sub-ordinate Debt for MSMEs” to supply assure cowl price Rs 20,000 to over 2 lakh MSMEs.
“As per the Scheme, the guarantee cover worth Rs. 20,000 crores will be provided to the promoters who can take debt from the banks to further invest in their stressed MSMEs as equity”, an official launch mentioned.
This Scheme seeks to increase help to the promoters of the operational MSMEs that are careworn and have turn into NPA as on April 30, 2020.
Promoters of the MSMEs might be given credit score equal to 15% of their stake (fairness plus debt) or Rs. 75 lakh whichever is decrease. Promoters in flip will infuse this quantity within the MSME unit as fairness and thereby improve the liquidity and preserve debt-equity ratio.
90 p.c assure protection for this sub-debt might be given underneath the Scheme and 10 p.c would come from the involved promoters. There might be a moratorium of seven years on fee of principal whereas most tenor for compensation might be 10 years.
As a part of Atmanirbhar Bharat bundle, Finance Minister had on May 13 introduced this scheme of sub-ordinate Debt to the promoters of operational however careworn MSMEs. After completion of mandatory formalities together with approval of CCEA and session with Finance Ministry, SIDBI and RBI amongst others, the scheme was formally launched at this time.
It is anticipated that this scheme would offer a lot required help to round 2 lakh MSMEs and can assist in reviving the financial exercise in and thru this sector. It can even assist in defending the livelihoods and jobs of hundreds of thousands of people that depend upon them. Promoter(s) of MSMEs assembly the eligibility standards might strategy any scheduled business banks to avail profit underneath the scheme. The scheme might be operationalised by Credit Guarantee Fund Trust for MSEs (CGTMSE),” the discharge mentioned.
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