Page 46 - Banking Finance April 2021

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Rs. 20,000 crore subordinate debt for Y It will provide equity funding for MSMEs with growth
potential and viability.
stressed MSMEs.
Y FoF will be operated through a Mother Fund and few
Y Equity support to stressed MSMEs- Government will
daughter funds.
support Stressed MSMEs with infusion of Rs. 20,000
crore equity support through Subordinate Debt. Y Fund structure will help leverage Rs. 50,000 cr. of funds
at daughter funds level.
Y Functioning MSMEs which are NPA or are stressed will
be eligible. Y It will help MSME to expand its size as well as capacity.
Y Government to infuse Rs. 4000 crore in Credit Y It will also encourage MSMEs to get listed on of Stock
Guarantee Trust Fund for MSEs (CGTMSE), which will Exchanges.
provide partial Credit Guarantee support to Banks.
New definition of MSMEs
Y Promoters of the MSME will be given debt by banks,
which will then be infused by them as equity in the Unit. Low threshold in MSME definition has created a fear among
MSMEs of graduating out of the benefits and hence killing
Y More than 2 lakh MSMEs are likely to be benefitted.
the urge to grow. Further, there has been a long-pending
Rs. 50,000 cr. equity infusion for MSMEs demand for revisions. Keeping in view the above factor and
through Fund of Funds (FoF) for the growth of MSME sector, GOI has revised the
definition of MSME sector. Distinction between
Y For MSMEs facing a severe shortage of Equity. manufacturing and services MSMEs has been removed and

Y Fund of Funds with Corpus of Rs. 10,000 crore will be Investment limits revised upwardly. Additional criteria for
set up. turnover have been also introduced.

Existing MSME Classification
Criteria: Investment in Plant & Machinery or Equipment
Classification Micro Small Medium
Mfg. Enterprises Investment < Rs. 25 lac Investment < Rs. 5 cr. Investment < Rs. 10 cr.
Services Enterprise Investment<Rs. 10 lac Investment < Rs. 2 cr. Investment < Rs. 5 cr.
Revised MSME Classification

Criteria: Investment in Plant & Machinery or Equipment And Annual Turnover
Classification Micro Small Medium
Mfg. & Services Enterprises Investment < Rs. 1 cr. Investment < Rs. 10 cr. Investment < Rs. 50 cr.
and and and
Turnover < Rs.5 cr. Turnover < Rs.50 cr. Turnover < Rs.250 cr.

This notification shall come into effect from 01.07.2020.
Global tenders shall be disallowed upto

Rs. 200 crores. (As per MoF notification
dated 15.05.2020)
Y MSMEs and other companies in India often faced unfair
competition from foreign companies.
Y Therefore, in a major initiative, the union cabinet has
disallowed Global tenders for Government tenders upto
Rs. 200 crore to enable MSMEs to participate in the
Government procurement process.

46 | 2021 | APRIL | BANKING FINANCE