Govt launches scheme to provide Rs 20,000 cr guarantee cover to MSMEs
New Delhi, Jun 25 (KNN) Union Minister of Micro, Small and Medium Enterprises (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, subordinate debt scheme to provide Rs 20,000 crore guarantee cover to two lakh MSMEs who can take debt from the banks to further invest in their stressed MSMEs as equity.
''It was 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 May 13th, 2020, the Finance Minister had announced this scheme of subordinate Debt to the promoters of operational but stressed MSMEs,'' said an official statement on Wednesday.
After completion of necessary formalities including approval of CCEA and consultation with the Finance Ministry, SIDBI and RBI among others, the scheme was formally launched Gadkari from Nagpur.
90% guarantee coverage for this sub-debt will be given under the Scheme and 10% would come from the concerned promoters.
The payment of the principal amount will be under moratorium for seven years. Maximum tenure for repayment will be 10 years.
''It is expected that this scheme would provide much required support to around 2 lakh MSMEs and will help in reviving the economic activity in and through this sector. It will also help in protecting the livelihoods and jobs of millions of people who depend on them,'' the statement added.
Gadkari expressed thanks to Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman for further extending support to the MSME sector.