New Delhi, Feb 22 (KNN) The Reserve Bank of India (RBI) has instructed all the banks to implement ‘Interest Subvention Scheme for Incremental credit to MSMEs 2018’ on immediate basis.

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.

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

In a notification issued, RBI said “It is requested to take appropriate action as envisaged for banks in the said operational guidelines and issue necessary instructions to your branches /controlling offices for successful implementation of the scheme.”

In November last year, Prime Minister Narendra Modi had announced a slew of measures, including interest subvention scheme for MSMEs. Adhering to this, Ministry of MSME, last month issued operational guidelines for implementing the scheme.

The Ministry 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.

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’. (KNN Bureau)