DNBR (PD) CC.No.096/03.10.001/2018-19
All systemically important
non-deposit taking NBFCs
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 therefore requested
to take appropriate action as envisaged for RBI registered systemically
important non-banking financial companies and issue necessary instructions
to your branches /controlling offices for implementation of the scheme.
Chief General Manager
Encl. as above
Subvention Scheme for MSMEs 2018 Background:
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 RBI registered systemically important
Non-banking financial companies.
(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
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
interest rates charged to MSMEs shall conform to 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.
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
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.
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.
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.
Half Yearly claims shall be submitted to the Chief General Manager,
Institutional Finance Vertical, SIDBI, Mumbai.
against each claim to individual institution shall be only after release of
funds from MoMSME.
2.5 Other covenants
shall act as a Nodal Agency for the purpose of channelizing of interest
subvention to the various lending institutions through their Nodal office.
lending institutions shall be responsible for submission of the accurate
data and monitoring of the scheme.
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
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 the Fund.