CREDIT GUARANTEE SCHEME FOR SUBORDINATE DEBT– Ministry of Micro, Small and Medium Enterprises MSME , has framed a Scheme for the purpose of providing guarantees in respect of credit facilities extended by eligible and registered scheduled commercial banks to borrowers in Micro, Small and Medium Enterprises (MSMEs). The scheme will be operationalized through a special window created for this purpose under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) msme consultancy
Credit facility
financial assistance provided under the scheme by way of sub-debt facility extended by the lending institution to the Promoters of the MSME units upto 15% of promoter’s stake or Rs. 75 lakh whichever is lower
Eligible borrower
The Scheme is applicable for those MSMEs whose accounts have been standard as on 31.03.2018 and have been in regular operations, either as standard accounts, or as NPA accounts during financial year 2018-19 and financial year 2019-20
MLIs / Lending institutions for this purpose shall include all Scheduled Commercial Banks (SCBs).
Duration
The Scheme would be applicable to all credit facilities sanctioned under CGSSD for a maximum period of 10 years from the guarantee availment date or March 31, 2021 whichever is earlier, or till an amount of Rs 20,000 crore of guarantee amount is approved- CREDIT GUARANTEE SCHEME FOR SUBORDINATE DEBT msme consultancy
Loan Amount eligible under the Guarantee Coverage
The guarantee coverage will be provided to the eligible borrower for the credit facilities extended under this scheme. Under this arrangement, promoter(s) of the MSME unit will be given credit equal to 15 % of his/her stake (equity plus debt) or Rs 75 lakh whichever is lower.
computation of sub debt amount eligible under the Scheme?
| Details | Scenerio 1 (inlakhs) | Scenerio 2 (inlakhs) | Scenerio 3 (inlakhs) |
| Promoter’s investment as equity in the MSME unit (A) | 200.00 | 400.00 | 500.00 |
| Promoter’s investment as debt/loan in the MSME unit (B) | 50.00 | 100.00 | 100.00 |
| Total Stake by the Promoters in the MSME unit (C) = (A) + (B) | 250.00 | 500.00 | 600.00 |
| 15% of Promoter’s stake in MSME unit 15% of (C) | 37.50 | 75.00 | 90.00 |
| Sub-debt eligible limit (15% or Rs.75 lakh, whichever is lower) | 37.50 | 75.00 | 75.00 |
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