MSME Ministry issues norms for implementing Interest Subvention Scheme; interest relief to be calculated at 2% points per annum
New Delhi, Jan 28 (KNN) Issuing operational guidelines for implementing interest subvention scheme for MSMEs, Ministry of MSME said that the interest relief will be calculated at 2% points per annum.
The interest relief will be calculated 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/drawl 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 Ministry decided that a new scheme i.e. ‘Interest Subvention Scheme for Incremental credit to MSMEs 2018’ will be implemented over 2018-19 and 2019-20 with an allocation of Rs 975 crore.
As part of access to credit, Prime Minister Narendra Modi announced a 2 % interest subvention for all GST registered MSMEs on fresh or incremental loans.
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.
It said “In order to ensure maximum coverage and outreach, all eligible working capital or term loan would be eligible for coverage to the extent of Rs 100 lakh only during the period of the scheme.”
Wherever for a single MSME both the facilities are extended viz. incremental working capital and term loan by an eligible institution, interest subvention would be made available only for a maximum financial assistance of Rs 100 lakh, it added.
As per the guidelines, MSME exporters availing interest subvention for pre-shipment or post-shipment credit under Department of Commerce will not be eligible for assistance under ‘Interest Subvention Scheme for Incremental credit to MSMEs 2018’.
In addition, MSMEs already availing interest subvention under any of the schemes of the state / central government will not be eligible under the proposed scheme.
Besides, Ministry said that 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, it added.
The benefit of the scheme will be available to only those MSMEs who have valid Udyog Aadhar number, a valid GSTN Number and the term loan or working capital extended by Scheduled Commercial Banks and RBI registered systemically important Non-Banking Finance Companies.
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