MSMEs to get Interest Subvention on borrowings from Co-op Banks also
New Delhi, Oct 16 (KNN) To extend further relief to COVID-19 hit MSME, RBI has relaxed the eligibility for interest subvention scheme.
RBI has also relaxed the original requirement of borrowers having Udyog Aadhar registration.
Now MSME creditors of Co-operative Banks will also get the subvention facility on their fresh or incremental borrowings.
The scheme, announced by the Government in February, 2018, provides for an interest relief of 2% per annum to eligible MSMEs & Traders on their outstanding fresh/incremental term loan/working capital.
One of the conditionality is the borrower shall have GST registration, Udyog Aadhar registration of the borrower was also an eligibility requirement which now has been relaxed.
The coverage of the Scheme is limited to total of all new / incremental term loans / working capital to the extent of Rs 100 lakh.
As per a RBI notification, the *validity of the scheme has been extended till March 31, 2021’ and ‘fresh or incremental term loan or working capital limit extended by co-operative banks with effect from March 3, 2020 will be eligible for coverage under the scheme.’
As per the guidelines, the scheme is available for loan accounts claims which have not been declared as NPA on the date of filing.
Earlier only borrowers of the scheduled banks were eligible for relief under the scheme.
The Scheme aims at encouraging both manufacturing and service enterprises to increase productivity and provides incentives to MSMEs for onboarding on GST platform which helps in formalization of economy, while reducing the cost of credit.
Extension of the scheme to borrowers of Co-operative Banks will be beneficial to small traders and micro enterprises who often find the next door co-operative banks more approachable for loan.
Originally available during 2018-19 and 2019-20 financial years, the scheme has now been extended till March, 2021, to provide relief to Covid – 19 hit borrowers.