Extension Of Credit Guarantee Scheme For Subordinate Debt

Ministry of Micro, Small & Medium Enterprises has extended the credit guarantee scheme for subordinate debt (CGSSD) by one more year till March 31, 2023. The decision of extension was made on the basis of the requests received from the stakeholders of the scheme.

For more details on Credit Guarantee Scheme for Stressed/NPA MSMEs, click here

Credit Guarantee Scheme for Subordinate Debt’

To provide emergency credit support to MSMEs impacted by COVID -19, the Ministry of Micro, Small and Medium Enterprises (MSMEs) has introduced the Distressed Asset Fund – Subordinated Debt for Stressed MSMEs on May 13, 2020, under the Atma Nirbhar Bharat Package. In this connection, another funding scheme of the

Credit Guarantee Scheme for Subordinate Debt (CGSSD was launched on June 24, 2020, to help the distressed MSME. As part of this Scheme, the guarantee coverage will be provided to schedule commercial banks for facilitating support to stressed MSME viz. SMA-2 and NPA accounts are eligible for restructuring as per RBI guidelines on the books of the Lending institutions. The promoters who can take debt from the banks to further invest in the stressed MSMEs as equity. This sub-debt facility is provided to the promoters of those operational MSMEs which are distressed or nonperforming assets (NPA).

Distressed Asset Fund – Subordinated Debt for Stressed MSMEs

The Distressed Asset Fund – Subordinated Debt for Stressed MSMEs is a scheme of Ministry of MSME under which credit facility is provided to the Promoters of the stressed MSMEs by Scheduled Commercial Banks for infusing the same as equity, quasi-equity, sub-debt in the unit.

The Maximum sub-debt amount Eligible under the Scheme

Under the Scheme, the Promoter(s) of the MSME unit will be given a credit facility equal to 15 % of their stake in the MSME entity (equity plus debt) or Rs.75 lakh whichever is lower according to the last audited Balance Sheet.

Earlier Extension

Initially, the scheme was upto March 31, 2021, and to keep the assistance available for stressed MSME units, the government had earlier extended this scheme upto March 31, 2022.

On the basis of the requests received from the stakeholders of the scheme, the Government has decided to further extend it by a period of another year beyond March 31, 2022. The scheme will now remain operational till March 31, 2022.

Duration of the Scheme

The Scheme would apply to all credit facilities sanctioned under the CGSSD scheme for a maximum period of 10 years from the guarantee availment date or 31.03.2023, whichever is earlier or till an amount of Rs 20,000 crore of guarantee amount is approved. The official Notification of the

MSME regarding the extension of the Credit Guarantee Scheme for Subordinate Debt is as follows:

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Frequently Asked Questions

Common questions about Credit Guarantee Scheme for Subordinate Debt.

The CGSSD is a scheme launched by the Ministry of Micro, Small and Medium Enterprises (MSMEs) to provide credit guarantee coverage to scheduled commercial banks for facilitating support to stressed MSMEs. The scheme aims to help promoters of operational but distressed or non-performing asset (NPA) MSMEs by allowing them to take sub-debt from banks to invest in their units as equity, quasi-equity, or sub-debt.

The CGSSD is aimed at assisting promoters of operational MSMEs that are classified as Special Mention Account (SMA)-2 or NPA accounts, which are eligible for restructuring as per the Reserve Bank of India (RBI) guidelines on the books of lending institutions.

Under the CGSSD, the promoter(s) of the MSME unit will be eligible for a credit facility equal to 15% of their stake in the MSME entity (equity plus debt) or Rs. 75 lakh, whichever is lower, according to the last audited balance sheet.

The CGSSD scheme will now remain operational till March 31, 2023, or until an amount of Rs. 20,000 crore of guarantee amount is approved, whichever is earlier. The scheme would apply to all credit facilities sanctioned under the CGSSD for a maximum period of 10 years from the guarantee availment date or till March 31, 2023, whichever is earlier.

The CGSSD scheme has been extended by one more year till March 31, 2023, based on requests received from stakeholders of the scheme. The government has decided to extend the scheme to continue providing assistance to stressed MSME units.

The Distressed Asset Fund – Subordinated Debt for Stressed MSMEs is a scheme introduced by the Ministry of MSMEs under the Atma Nirbhar Bharat Package. It aims to provide emergency credit support to MSMEs impacted by COVID-19 by facilitating the provision of sub-debt facilities to promoters of stressed MSMEs by scheduled commercial banks.

The CGSSD scheme benefits promoters of stressed MSMEs by allowing them to access credit facilities from scheduled commercial banks to infuse the funds as equity, quasi-equity, or sub-debt in their distressed or NPA units. This can help revive and restructure the operations of these MSMEs.

Under the CGSSD scheme, the government provides a credit guarantee coverage to scheduled commercial banks for facilitating support to stressed MSMEs, such as SMA-2 and NPA accounts that are eligible for restructuring as per RBI guidelines.

To be eligible for assistance under the CGSSD scheme, the MSME unit must be operational, and its account must be classified as SMA-2 or NPA, which is eligible for restructuring as per RBI guidelines on the books of lending institutions.

Yes, the CGSSD scheme would apply to all credit facilities sanctioned under the scheme for a maximum period of 10 years from the guarantee availment date or till March 31, 2023, whichever is earlier, or until an amount of Rs. 20,000 crore of guarantee amount is approved.