MSME Minister Nitin Gadkari launches CGSSD
Micro, Small and Medium Enterprises (MSME) Minister Nitin Gadkari today launched the Credit Guarantee Scheme for Sub-ordinate Debt (CGSSD).
Micro, Small and Medium Enterprises (MSME) Minister Nitin Gadkari today launched the Credit Guarantee Scheme for Sub-ordinate Debt (CGSSD). The scheme will be operationalised through the Credit Guarantee Fund Trust for MSEs (CGTMSE).
As per the Scheme, guarantee cover worth Rs 20,000 crore will be provided to the promoters who can take debt from the banks to further invest in their stressed MSMEs as equity.
The scheme seeks to extend support to the promoters of the operational MSMEs, which are stressed and have turned NPA as on April 30, 2020.
Under the scheme, Promoters of the MSMEs will be given credit equal to 15 per cent of their stake or Rs 75 lakh whichever is lower. Promoter(s) in turn will infuse this amount in the MSME unit as equity and thereby enhance the liquidity and maintain the debt-equity ratio. 90 per cent guarantee coverage for this sub-debt will be given under the Scheme and 10 per cent would come from the concerned promoters.
There will be a moratorium of 7 years on payment of principal whereas maximum tenure for repayment will be 10 years. The scheme will provide support to around 2 lakh MSMEs and will help in reviving the economic activity in and through this sector. The scheme will also help in protecting the livelihoods and jobs of millions of people who depend on them.
As per the norms set for the scheme, any promoter(s) of MSME units, who meet the eligibility criteria would approach any scheduled commercial banks to avail benefit under the scheme.