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MSMEs Launches Funding Scheme “Distressed Assets Fund–Sub-ordinate Debt for MSMEs” to Help the Distressed MSME Sector

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Distressed Assets Fund–Sub-ordinate Debt for MSMEs”On 24 June 2020, Nitin Gadkari(Minister of Micro Small and Medium Enterprises) launched the Credit Guarantee Scheme for Sub-ordinate debt(CGSSD) which is also called the “Distressed Assets Fund–Sub-ordinate Debt for MSMEs” to provide Rs 20000 crore guarantee cover to two lakh MSMEs.

As a part of Atma Nirbhar Bharat package, the Finance minister Nirmala Sitharaman has announced this scheme of sub-ordinate Debt to the promoters of operational but stressed MSMEs on 13th May 2020. The scheme was formally launched by Shri Nitin Gadkari, after the completion of formalities including approval of CCEA and consultation with the Finance Ministry, SIDBI and RBI among others.

Highlights of Scheme:-

  • The scheme seeks to extend support to the promoters of the operational MSMEs which are stressed and have become NPA as on 30th April 2020.
  • Promoters  of MSMEs are given credit equal to 15% of their stake(Equity plus debt) or Rs 75 lakh, whichever is lower.
  • Promoters infuse the amounts in the MSME unit as equity and enhance the liquidity and maintain debt-equity ratio.
  • 90% of guarantee coverage for the sub-debt will be given under the scheme and 10% would come from concerned promoters.
  • The maximum tenure for repayment will be 10 years.
  • The scheme will be operationalised through Credit Guarantee Fund Trust for MSEs (CGTMSE).

Scope of the Scheme:-

  • It is expected that this scheme would provide required support to around 2 lakh MSMEs and help reviving the economic activity in/through this sector.
  • It helps in protecting the livelihoods and jobs of millions of people who depend on them .

About MSME:
Minister of MSME: Nitin Gadkari
Minister of State (Independent Charge):Pratap Chandra Sarangi