The scheme offers a 7-year moratorium for organizations to spend the principal quantity.
Credit and Finance for MSMEs: Rs 20,000 crore subordinate debt scheme for stressed MSMEs, which was announced in May by the Modi government and operationalized in August, has began to determine eligible loan accounts for disbursement. So far, 8,502 stressed or non-performing asset (NPA) MSME accounts have been identified by the State Bank of India, and the disbursement course of action is currently in progress, the Ministry of Finance mentioned on Sunday sharing the progress of several schemes beneath the Atmanirbhar Bharat packages. The scheme was finalised on June 24, 2020, as component of the Rs 3.7-lakh-crore MSME package beneath the Rs 20-lakh-crore stimulus for the Atmanirbhar Bharat campaign.
The scheme targeted to advantage 2 lakh operational MSMEs, which are stressed and have turned NPA as of April 30, 2020. Such MSMEs are eligible to safe credit equivalent to 15 per cent of their stake (equity plus debt) in the organization or Rs 75 lakh whichever is reduced. Entrepreneurs or promoters would have to infuse the credit in the organization as equity to enhance liquidity and preserve the debt-equity ratio, according to the MSME Ministry. While 90 per cent of the assure help for the credit will be beneath the scheme, the remaining 10 per cent would be contributed by MSMEs. The scheme offers a 7-year moratorium for organizations to spend the principal quantity. The maximum repayment period would be 10 years.
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Importantly, the Cabinet had authorized the distressed assets fund of Rs 4,000 crore and Fund of Funds with a corpus of Rs 10,000 crore to help MSMEs, MSME Minister Nitin Gadkari had mentioned in June. The distressed fund was component of the Rs 20,000 crore subordinate debt scheme. The government will provide Rs 4,000 crore help to the CGTMSE to provide partial credit assure help to banks, to lend to MSMEs. The minister had mentioned that 6 lakh MSME loan accounts had been restructured till March 21 and a further 25 lakh had been most likely to get restructured till December 31, 2020.
Meanwhile, the MSME NPA ratio enhanced to 12.8 per cent in June 2020 up from 11.4 per cent in June 2019, according to TransUnion Cibil’s MSME Pulse report in October 2020. Private banks’ MSME NPA ratio went up to 5.8 per cent in June 2020 from 4.6 per cent in June 2019 whilst for public banks, the ratio enhanced to 18.6 per cent in June from 17.5 per cent in the year-ago period. On the other hand, NBFCs saw a 9.7 per cent jump in the NPA ratio from 5.8 per cent in June final year.