Page 45 - Banking Finance April 2021

ARTICLE

Y Enterprises having MSME registration are eligible for Accordingly, the Union Cabinet has approved additional
Counter Guarantee from the Government of India funding of up to Rs. 3 lacs crore at a concessional rate of
through CGSTI 9.25% through the Guaranteed Emergency Credit Line
(GECL) for the MSME sector severely hit by the Corona Virus
Present scenario crisis. Details of the scheme are given below:
MSMEs are the most affected by this economic downturn, Y Under the scheme, National Credit Guarantee Trustee
both sparked and accelerated by the Corona Virus Company (NCGTC) will provide 100% guarantee
pandemic, as they don't have the buffers of the bigger firms coverage of the additional credit up to Rs. 3 lac crore
or access to low-cost capital to help them tide over this funded to eligible MSMEs and interested PMMY (Mudra)
period. With demand collapsing, and unlikely to rebound borrowers, in the form of a guaranteed emergency
strongly in the near term, it will be increasingly difficult for credit line (GECL) facility.
these businesses to meet their obligations such as repayment Y The scheme would be applicable to all loans sanctioned
of loans or wages to their employees.
under GECL facility during the period from the date of
announcement i.e. 13.05.2020, of the scheme to
The current Corona Virus pandemic (COVID-19) lockdown
substantially disrupt the operations of these MSMEs due to October 31 or till an amount of Rs. 3 lac crore is
their dependence on the cash-economy that is severely hit sanctioned under the scheme, whichever is earlier.
by the lockdown, the physical non-availability of workers, Y The scheme aims at mitigating the economic distress
and restrictions in the availability of raw materials and being faced by about 45 lakh MSMEs by providing them
transport infrastructure. additional funding of up to Rs. 3 lakh crore in the form
of a fully guaranteed emergency credit line
What next for MSME during COVID

situation Eligibility & other details:
In such a situation of crisis, where diseases like COVID-19 Y Credit Line to Businesses/MSMEs from Banks and NBFCs
have stopped the working of the world and have affected up to 20% of entire outstanding credit as on 29.2.2020,
the lives of people in various ways. MSME are the most which were less than or equal to 60 days past due as
affected due to series of Lockdown and lack of demand in on that date, i.e., regular, SMA- 0(Principal or interest
the market. There are various schemes introduced by the payment not overdue for more than 30 days) and SMA-
government to support the businessmen so that they can 1(Principal or interest payment overdue between 31-
continue with the work. These schemes will help them not 60 days) accounts.
only to improve business but also to provide them with
Y Borrowers with up to Rs. 25 crore outstanding and Rs.
support during the situation of such a crisis. The government
of India has worked since the lockdown commenced on 100 crore turnover eligible
various issues. The government has taken initiative for small Y Additional Loans will have a tenor of 4 years with a
scale industries as well as for various firms and businesses. moratorium of 12 months on Principal repayment

Various benefits/schemes for MSME Y 100% credit guarantee cover from NCGTC.
during COVID-19: MSME relief package Y No Guarantee Fee & no fresh Collaterals.
[As per Self-Reliant India Movement (Atmanirbhar Bharath Y The scheme is aimed to benefit over 45 lakh MSME
Abhiyan) dated 13.05.2020] Units.

Y Maximum Banks/NBFCs are giving this additional loan
Rs. 3.00 lac crores Collateral-free Guaranteed pre-
to existing customers as a pre-approved loan based on
approved Loans for MSMEs
certain criteria as advised by RBI.
Businesses/MSMEs have been badly hit due to COVID-19.
They need additional funding to meet operational Y Interest rates under the scheme will be capped at 9.25
requirements, buy raw material and restart business. per cent for banks and FIs, and at 14 per cent for NBFCs.

BANKING FINANCE | APRIL | 2021 | 45