Page 29 - Banking Finance August 2021

ARTICLE

subordinate debt announced by the Government of
India as part of the economic package.
Y The government will provide Rs. 4,000 crore support
to the CGTMSE which will give partial credit guarantee
support to banks, to lend to MSMEs.
Y Eligible MSMEs :
o Standard as on 31.03.2018 & Stressed MSMEs viz.
SMA2 and NPA as on 30-04-2020.
o Regular operations, either as standard accounts, or
as NPA accounts during 2018-19 and 2019-20 and
should be eligible for restructuring (as per RBI
guidelines)
Y Maximum amount eligible :
o Equal to 15 % of total stake in the entity (equity
Y The Rate of interest should be as per one of the RBI plus debt) or Rs. 75 lakh whichever is lower as per
prescribed external benchmark linked rates +1% last audited Balance Sheet.
(maximum of 9.25% for banks and FIs. For NBFCs, cap Y Extent of Guarantee coverage :
at 14 %). o 90 % Guarantee fee : 1.50 % p.a
Y Bank to open a separate loan account distinct from the Y Duration of the scheme:
existing loan account(s) of the borrower. o 10 years (Principal moratorium upto 7 years).
Y Government of India through NCGTC launched o Scheme applicable up to March 31, 2021 or till an
Emergency Credit Line Guarantee Scheme (ECLGS). To amount of Rs. 20,000 crore of guarantee amount
offer 100% guarantee to GECL extended by all MLIs is approved.
without any guarantee fee. The guarantee would be o MSME account where the legal / recovery
applicable to all loans sanctioned under GECL during the proceedings are underway are also eligible if found
period from May 23, 2020 to 31st October, 2020, or till viable as per RBI's restructuring guidelines.
an amount of Rs. 3 lakh crore is sanctioned under o If MSME has existing limits with more than one
GECL, whichever is earlier. lender, credit facility can be availed by the MSMEs
Y ECLGS will be available to new facility sanctioned under through one lender only with suitable declaration
GECL, even if existing loans of the borrower are not regarding the arrangement.
guaranteed under any of the schemes. Banks can give o The credit facility will be covered under guarantee
zero risk weights to the extent of guarantee coverage. even if the borrowers other loans are not covered
under any of the guarantee schemes such as
3. Credit Guarantee Scheme for CGFMU or CGTMSE.
Subordinate Debt (CGSSD): o To lodge a claim, the guarantee in respect of that
credit facility should have been in force at the time
Y To provide relief to MSMEs reeling under the impact of of account turning NPA and after completion of
the Covid-19 pandemic, Government of India created lock-in period of 18 months.
the Distressed Assets Fund - Subordinate Debt Scheme
o CGTMSE guaranteed portion to be assigned zero
to provide equity support for financially stressed MSMEs.
risk weight, as per extant guidelines.
Y Under this scheme, promoters of the MSME will be
provided debt by banks, which will then be infused by 4. Equity infusion for MSMEs through
promoters as equity in the MSME Unit. Fund of Funds:

Y The distressed Asset Fund is part of the Rs. 20,000 crore Y Government of India proposed a mother fund (Rs. 10000

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