MSME Ministry issues guidelines on ‘Distressed Asset Fund – Subordinated Debt for Stressed MSMEs’
New Delhi, June 26 (KNN) The Ministry of Micro, Small & Medium Enterprises (MoMSME) has issued guidelines on ‘Distressed Asset Fund – Subordinated Debt for Stressed MSMEs’ – Communication.
The guidelines have been approved by the Department of Financial Services, Department of Expenditure and Reserve Bank of India.
The approved budgetary outlay for the scheme is Rs 4,000 crore.
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)’.
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 remaining10% 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 would be applicable to all credit facilities sanctioned under CGSSD for a maximum period of 10 years from the guarantee availment date or March 31, 2021 whichever is earlier, or till an amount of Rs 20,000 crore of guarantee amount is approved.
MLIs / Lending institutions for this purpose shall include all Scheduled Commercial Banks (SCBs).
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.
According to the guideline, Fraud/ Willful defaulter accounts will not be considered under the proposed scheme.
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.
As much as 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.
The amount equivalent to the guarantee fee payable by the eligible lending institution may be recovered by it, at its discretion from the eligible borrower.
The guarantee service fee once paid by the lending institution to the Trust is non-refundable. Guarantee service fee shall not be refunded, except under certain circumstances like -Excess remittance; Remittance made more than once against the same portfolio.
The full guidelines can be viewed at: