Interest Subvention Scheme for MSMEs
This topic provides information related to Interest Subvention Scheme for MSMEs.
The Ministry of Micro, Small and Medium Enterprises (MSME), Government of India, on November 2, 2018, has announced "Interest Subvention Scheme for MSMEs". Small Industries Development Bank of India (SIDBI) is the single national level nodal implementation agency for 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. The Scheme will be in operation for a period of two financial years FY 2019 and FY 2020.
Eligibility for Coverage
- MSMEs who meet the following criteria shall be eligible as beneficiaries under the Scheme:
- Valid Udyog Aadhar Number [UAN]
- Valid GSTN Number
The interest relief will be calculated at two percentage points per annum (2% p.a.), on outstanding balance from time to time from the date of disbursal / drawal or the date of notification of this scheme, whichever is later, on the incremental or fresh amount of working capital sanctioned or incremental or new term loan disbursed by eligible institutions.
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 internal / external rating of the MSME 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.
Source : RBI