Page 43 - Banking Finance September 2022

ARTICLE

SUBORDINATED

DEBT FOR

STRESSED

MSMES

usiness Enterprises are navigating through a viz SMA-2 and NPA accounts as on 30.04.2020 and eligible
B broad range of interrelated issues that span from Bank. For availing the sub-debt, the unit must be in running
for restructuring as per RBI guidelines on the books of the
keeping their employees and customer safe,
condition and operational.
shoring-up cash and liquidity, reorienting
operations in view of the prolonged lockdown
across economy. MSME units such as Individuals / Proprietorship, LLP,
Partnership, Private Limited Company or registered
To tide over this situation Reserve Bank of India, company are eligible to be covered under the scheme.
Government and other regulatory bodies among others have
announced various dedicated schemes, regulatory packages As a special dispensation, Reserve Bank of India has
& relief measures for business units affected by COVID-19 permitted to reckon the funds infused by the Promoters in
pandemic. their MSME units through loans availed under this scheme
as equity/ quasi equity from the promoters for debt-equity
"Distressed Asset Fund - Subordinated Debt for Stressed computation.
MSMEs" is one such scheme to extend support to the
promoter(s) of the operational MSMEs which are stressed, "Distressed Assets Fund" of Rs. 4000 crore has been created
by Government of India for providing guarantee coverage
to the loans given / credit extended to the promoters of the
About the author
eligible MSME units under the scheme.
Pushkar Kumar Sinha
Financial assistance has to be provided under the scheme
Chief Manager (Faculty) & Centre
in-charge in Union Bank of India, by way of sub-debt facility extended by the lending
Staff Training Centre, Bhubaneswar institution to the Promoters of the MSME units upto 15% of

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