New Delhi, July 4 (KNN) The Ministry of Micro Small and Medium Enterprises (MSME) has notified the operational guidelines for implementing the ‘Interest Subvention Scheme’, which was announced on November 2, 2018 by Prime Minister Narendra Modi.

The Scheme aims at encouraging both manufacturing and service enterprises to increase productivity and provides incentives to MSMEs for onboarding in GST platform which helps in formalization of economy, while reducing the cost of credit.

The Scheme will be in operation for a period of two financial years FY 2019 and FY 2020.

As per the guidelines, the interest relief will be calculated at two percentage points per annum, on the incremental, amount of working capital credit or incremental/new term loan disbursed by eligible institutions to eligible MSMEs from the date of disbursal / drawal or the date of notification of this scheme whichever is later computed on outstanding balance from time to time and received / recovered by the lending institution.

The interest rates charged to MSMEs shall conform to Code of Ethics and Fair Practices Code' as published by respective institutions (as per extant RBI guidelines) and linked to the respective rating of the MSME as per internal/external rating as per applicable interest rate guidelines of the institution.

The loan accounts on the date of filing claim should not have been declared as NPA as per extant guidelines in force. No interest subvention shall be admissible for any period during which the account remains NPA, said the guidelines.

It states, the interest subvention would be released only on the basis of the claim duly certified' by the Statutory Auditors of the eligible institutions and SIDBI shall not be liable for any inaccurate submission of data by lending institutions.

In case of any arbitration, SIDBI shall not be made a party to the case and in case of any dispute, fees/charges if any shall be borne by Government, it added.

Interest subvention amount shall be released by SIDBI subject to availability of funds from GOl. Also, MoMSME, GOI will be the final authority for all interest subvention related matters and their decision would be final and binding. Receipt of funds by the eligible institutions would be treated as Utilization Certificate of the Fund.

The scheme would be monitored by a Governing Board [GB], chaired by Additional Secretary & Development Commissioner, Ministry of MSME. The GB shall consist of representatives of the DFS (MoF), SIDBI and public sector banks and MSME associations as members.

The GB will lay down the policy guidelines and give necessary directions for; smooth functioning of the Scheme. Continuation of the Scheme beyond FY2020 would' be considered after an independent third party evaluation by an institute of repute and performance of Key Performance Indicators [KPls] as advised by MoMSME.

SIDBI will operate the scheme according to guidelines laid down and directions given. SIDBI would prescribe the modalities for submission of subsidy claims by eligible institutions. Further detailed methodology for release and adjustment of subsidy shall be worked out by GOI in consultation with SIDBI, said the Ministry.

SIDBI would specify in all communications that interest subvention amount shall be released by SIDBI subject to availability of funds from Government.