The Chairman / Managing Director
All Scheduled Commercial Banks
(including Regional Rural Banks)
Madam / Dear Sir,
Interest Subvention Scheme for
As you are aware, Government of
India, on November 2, 2018, has announced ‘Interest Subvention Scheme for
2. A copy of the salient
features and operational guidelines for implementation of the captioned
scheme, released by the Ministry of Micro, Small and Medium Enterprises
(MSME), Government of India, is enclosed.
Small Industries Development Bank of India (SIDBI) is the single national
level nodal implementation agency for the scheme.
3. You are requested to take
appropriate action as envisaged for banks in the said operational
guidelines and issue necessary instructions to your branches /controlling
offices for successful implementation of the scheme.
4. Kindly acknowledge receipt.
(Sonali Sen Gupta)
Chief General Manager
Encl. as above
Subvention Scheme for MSMEs 2018
The Micro, Small and Medium
Enterprises [MSME] sector is a significant contributor towards building up
of a strong and stable national economy. Hon’ble Prime Minister while
launching outreach initiative for MSME sector on November 2nd, 2018
highlighted that access to credit, access to market, technology
upgradation, ease of doing business and a sense of security for employees
are five key aspects for facilitating MSME sector. Twelve announcements
have been made to address each of these five categories. As part of access
to credit, Prime Minister announced 2% interest subvention for all GST
registered MSMEs, on fresh or incremental loans.
Ministry of MSME (MoMSME) has
decided that a new scheme viz. “Interest Subvention Scheme for Incremental
credit to MSMEs 2018” will be implemented over 2018-19 and 2019-20.
2. Salient Features of the
2.1 Purpose, Scope and Duration
The Scheme aims at encouraging
both manufacturing and service enterprises to increase productivity and
provides incentives to MSMEs for onboarding on GST platform which helps in
formalization of economy, while reducing the cost of credit. The Scheme
will be in operation for a period of two financial years FY 2019 and FY
2.2 Eligibility for Coverage
(i) All MSMEs who meet the
following criteria shall be eligible as beneficiaries under the Scheme:
a. Valid Udyog Aadhar Number
b. Valid GSTN Number
(ii) Incremental term loan or
fresh term loan or incremental or fresh working capital extended during the
current FY viz. from 2nd
November 2018 and next FY would be
eligible for coverage.
(iii) The term loan or working
capital should have been extended by Scheduled Commercial Banks.
(iv) In order to ensure maximum
coverage and outreach, all working capital or term loan would be eligible
for coverage to the extent of ?100 lakh only during the period of the
(v) Wherever both the facilities
working capital and term loan are extended to a MSME by an eligible
institution, interest subvention would be made available for a maximum
financial assistance of ?100 lakh.
(vii) MSME exporters availing
interest subvention for pre-shipment or post-shipment credit under
Department of Commerce will not be eligible for assistance under Interest
Subvention Scheme for Incremental credit to MSMEs 2018.
(viii) MSMEs already availing
interest subvention under any of the Schemes of the State / Central Govt.
will not be eligible under the proposed Scheme.
2.3 Operational formalities
1. The interest relief will be
calculated at two
percentage points per annum (2% p.a.), on
outstanding balance from time to time from the date of disbursal / drawal
or the date of notification of this scheme, whichever is later, on the
incremental or fresh amount of working capital sanctioned or incremental or
new term loan disbursed by eligible institutions.
2. The interest rates charged to
MSMEs shall conform to Code of Ethics and Fair Practices Code as published
by respective institutions (as per extant RBI guidelines) and linked to the
respective internal / external rating of the MSME as per applicable
interest rate guidelines of the institution.
3. The loan accounts on the date
of filing claim should not have been declared as NPA as per extant
guidelines in force. No interest subvention shall be admissible for any
period during which the account remains NPA.
2.4 Claim Submission
1. Nodal office of eligible
lending institutions should submit their half yearly claims to SIDBI as per
the format given in Annex I.
Information with respect to loans disbursed and interest relief claimed
(branch-wise) shall be submitted in soft copy in excel in the format given
in Annex II.
2. The format for compilation of
data by branches of eligible institutions is given in Annex III. The same may be submitted by the
branches to their Controlling Offices / Head Offices.
3. All claims have to be duly
certified by the statutory
auditors of the eligible institutions. The
certificate shall include statement on verification of individual accounts
with regard to amount, incremental / fresh lending, interest charged and
amount claimed. Lending institutions shall ensure that total relief claimed
as indicated in Annex I, II and III are matched.
4. The Half Yearly claims shall
be submitted to the Chief General Manager, Institutional Finance Vertical,
5. Disbursement against each
claim to individual institution shall be only after release of funds from
2.5 Other covenants
1. SIDBI shall act as a Nodal
Agency for the purpose of channelizing of interest subvention to the
various lending institutions through their Nodal office.
2. All lending institutions
shall be responsible for submission of the accurate data and monitoring of
3. The interest subvention would
be released only on the basis of claim duly certified by the Statutory
Auditors of the eligible institutions. SIDBI shall not be liable for any
inaccurate submission of data by lending institutions.
4. Interest subvention amount
shall be released by SIDBI subject to availability of funds from GOI. Also,
MoMSME, GOI will be the final authority for all interest subvention related
matters and their decision would be final and binding. Receipt of funds by
the eligible institutions would be treated as Utilization Certificate of