Interest Subvention Scheme for MSMEs

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Notification no -RBI/2018-19/125 FIDD.CO.MSME.BC.No.14/06.02.031/2018-19 February 21, 2019


The Chairman/Managing Director & CEOs
All Scheduled Commercial Banks
(including Regional Rural Banks)
Madam/Dear Sir,
Interest Subvention Scheme for MSMEs

As you are aware, Government of India, on November 2, 2018, has announced ‘Interest Subvention Scheme for MSMEs 2018’.

  1. 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.
  2. 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.
  3. Kindly acknowledge receipt.
    Yours faithfully,
    (Sonali Sen Gupta) Chief General Manager
    Encl. as above

Interest Subvention Scheme for MSMEs 2018

  1. 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 Scheme
    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 2020.

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 [UAN]
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 Scheme.
(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

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