New MSME Schemes: PM Economic Package for MSME Sector

For further details on below queries, you may please visit www.dcmsme.gov.in

Rs. 3.00 Lakh crores loans to MSMEs: Collateral & Guarantee Free

Businesses / MSMEs have been badly hit due to COVID-19. Need additional funding to meet operational liabilities built up, buy raw material and restart business.

Guarantee free and collateral free loans amounting to Rs. 3.00 Lakh crore have been approved.

The Scheme is implemented by Department of Financial Services.

Nature of Assistance

  • Upto 20% of entire Outstanding credit as on 29.2.2020
  • Loans up to Rs. 25 crore Outstanding and Units upto Rs. 100 crore Turnover eligible.
  • Loans to have 4 year tenor.
  • 12 months moratorium on Principal repayment.
  • Interest to be capped.

Salient Features

  • 100% credit guarantee cover to Banks and NBFCs on principal.
  • Scheme can be availed till 31st Oct 2020.
  • No guarantee fee, no fresh collateral.

Expected Impact

It is expected that about 45 lakh units can avail benefit and resume business activity and safeguard the employment of people.

Who Can Apply

All businesses/MSMEs are eligible.

How to Apply

Through Banks, DFS and National Credit Guarantee Trustee Company Ltd (NCGTC).

For more Information: Kindly visit @ www.champions.gov.in Or write on email: champions@gov.in / info@ncgtc.in

Distressed Assets Fund - Subordinate Debt Scheme for MSMEs

MSMEs survive on thin margins and come under financial stress at slightest disruption. To support MSME units which have become stressed, there is a need to infuse capital in the MSME unit in the form of equity or sub debt so that they can be revived;

The Distressed Assets Fund–Sub Debt Scheme seeks to extend support to the promoter(s) of the distressed units MSMEs by providing a debt facility of up to 15% of the promoter contribution or Rs 75 lakhs, to the Promoter(s);

Promoter(s) in turn will infuse the amount in the MSME unit as equity and thereby enhance the liquidity and maintain debt-equity ratio.

Nature of Assistance

  • Guarantee for fund raising for Revival: GOI will provide guarantee coverage of up to 85% for loans up to Rs. 5 lakh and 75% for loans beyond Rs 5 lakh to MSMEs for them to raise funds from Financial Institutions.

Salient Features

  • The quasi-equity provision with the guarantee balances the risks and rewards between the lender (bank) and the customer. In a situation where an outright loan is too risky, quasi-equity with guarantee will provide the requisite financing to the company
  • Subordinate debt will be of substantial help in sustaining and reviving the MSMEs which have either become NPA or are on the brink of becoming NPA.

Expected Impact

  • Provision for sub debt will be of Rs. 20000 crores which is likely to benefit two lakh MSMEs
  • A bigger number of MSME promoter(s) can do business without worry and avail present opportunities
  • These MSMEs will continue to function, provide jobs and contribute in National Economy

Who Can Apply

  • Functioning MSMEs which are NPA or are stressed will be eligible
  • Promoter(s) of such units can apply

How to Apply

Promoter(s) of MSMEs meeting the eligibility criteria may approach scheduled commercial banks to avail benefit under the scheme.

Equity Infusion for MSMEs through Fund of Funds

MSMEs face severe shortage of equity. The Fund of Funds will provide equity funding for MSMEs with growth potential and viability with the ultimate aim of encouraging MSMEs to grow and get listed on stock exchanges;

VCs/PEs firms do offer early stage funding but very few of them provide growth stage funding;

With Government intervention, this scheme would be able to intermediate different types of funds into underserved MSMEs and address the growth needs of viable and high growth MSMEs.

Nature of Assistance

  • Growth Funding to MSMEs through equity financing: GOI will support VC/PE firms in investing in commercially viable MSMEs in meeting their growth requirements. The proposed fund of funds will encourage private sector investments in the MSME sector and leverage Rs.50,000 crore. The actual investment may be even higher.
  • Private funding leverage: Fund of Funds aims to achieve private funding leverage through the use of professional fund managers with access to funding and strategic performance oversight. This will help attract a wide range of investors, including financial institutions, corporate investors, banks, other government funds, HNW individuals to invest into MSMEs.

Salient Features

  • Under the scheme, there would be a Mother Fund, where Government of India will be Anchor Investor
  • The Mother Fund can invest daughter funds who can deploy the investments in targeted MSMEs
  • This will create a partnership with MSMEs in their growth journey and enable them to grow bigger and get listed on stock exchanges

Expected Impact

The scheme is expected to facilitate equity financing of Rs.50,000 crore in the MSME Sector.

Who Can Apply

All MSMEs are eligible

How to Apply

Through Investor Funds onboarded and registered with proposed Fund of Funds.

NEW MSME Schemes

FAQs : New schemes : PM Economic Package for MSME Sector

What are the measures announced by the government under "Atmanirbhar Bharat" for MSMEs?

Keeping in view the hardship faced by MSMEs during COVID 19 pandemic crisis, the government has announced several measures intended to provide the necessary support to deal with the current economic crisis such as:

  • Rs 3 lakh crore Collateral-free Automatic Loans
  • Rs 20,000 crore Subordinate Debt for Stressed MSMEs
  • Rs 50,000 crore Equity infusion for MSMEs through Fund of Funds
  • Global tenders to be disallowed up to Rs 200 crore
  • Revised definition of MSMEs
  • Delayed Payment:All receivables of MSMEs will be cleared by Government and PSU in 45 days
FAQs : Delayed Payment

MSME Samadhaan is a Portal created by Office of DC(MSME), Ministry of Micro, Small and Medium Enterprises (MSME) where Micro and Small Enterprises (MSEs) can file their applications online regarding delayed payments. Portal: https://samadhaan.msme.gov.in/MyMsme/MSEFC/COM_MSEFC_EntLogin.aspx

No, MSME SAMADHAAN online portal is developed by Ministry of MSME only to facilitate MSEs filing of their applications regarding delayed payments online. The application once filed is forwarded automatically online to the concerned Micro and Small Enterprise Facilitation Council (MSEFC) established by the State/UTs as per the provisions of MSMED-Act 2006. Action on the applications regarding delayed payment is taken by the concerned MSEFC only.

No. Only the MSEFCs have been empowered as per MSMED Act, 2006 for taking decisions regarding its reference made with them. This office does not intervene in the matters of MSEFC. In short, The Ministry of MSME cannot interfere with judicial functioning of MSEFC.

Yes, UAM is mandatory to file applications online on MSME Samadhaan Portal.

Registration for Udyog Aadhaar can be done online on the official website of Ministry of MSME free of cost at following address – https://udyogaadhaar.gov.in.

No. MSME Samadhaan Portal has been created only to facilitate online applications regarding delayed payments. Physical applications can also be filed at the concerned MSEFC.

The applications are converted into case by the concerned MSEFC.

After submission, the application is automatically forwarded online to concerned MSEFC. Therefore, concerned MSEFC is to be contacted after filing the application online on MSME Samadhaan Portal. The contact address of concerned MSEFC is mentioned on the acknowledgement sent on the registered email of the applicant.

Yes, work order is compulsory. In case purchase order is oral an affidavit to that effect is to be submitted.

Multiple invoices can be combined into single PDF and can be uploaded. The affidavit of oral purchase order is to be included in single PDF.

With the enactment of the Micro, Small and Medium Enterprises Development (MSMED), Act 2006, for the goods and services supplied by the MSEME units, payments have to be made by the buyers as under:

  • The buyer is to make payment on or before the date agreed on between him and the supplier in writing or, in case of no agreement, before the appointed day. The agreement between seller and buyer shall not exceed more than 45 days. If the buyer fails to make payment of the amount to the supplier, he shall be liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or, on the date agreed on, at three times of the Bank Rate notified by Reserve Bank. For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the interest as advised at above. In case of dispute with regard to any amount due, a reference shall be made to the Micro and Small Enterprises Facilitation Council, constituted by the respective State Government.
  • To take care of the payment obligations of large corporate borrowers to MSEs, banks have been advised that while sanctioning/renewing credit limits to their large corporate borrowers (i.e. borrowers enjoying working capital limits of Rs. 10 crore and above from the banking system), to fix separate sub-limits, within the overall limits, specifically for meeting payment obligations in respect of purchases from MSEs either on cash basis or on bill basis.
  • Banks are also advised by RBI to closely monitor the operations in the sub-limits, particularly with reference to their corporate borrowers' dues to MSE units by ascertaining periodically from their corporate borrowers, the extent of their dues to MSE suppliers and ensuring that the corporate pay off such dues before the 'appointed day' /agreed date by using the balance available in the sub-limit so created. In this regard the relevant RBI circular; IECD/5/08.12.01/2000-01 dated October 16, 2000 (reiterated on May 30, 2003, vide circular No. IECD.No.20/08.12.01/2002-03 ) available on RBI website.