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Kerala MSMEs Revival & Rehabilitation Scheme

Kerala MSMEs Revival & Rehabilitation Scheme

Kerala MSMEs Revival & Rehabilitation Scheme

The sickness of industries leads to problems such as unemployment, increase in non-productive assets, reduced flow of institutional finance, revenue loss to the State and Central Government etc. The factors responsible for sickness in industries include diversion of funds, non-availability of skilled manpower, lack of entrepreneurship, marketing problems etc. Hence, keeping this in view, the Kerala Government has initiated the “Kerala stressed MSMEs Revival & Rehabilitation Scheme” aims at reviving MSME units which suffer due to stressed assets. In this article, we look at Kerala stressed MSMEs Revival & Rehabilitation Scheme in detail.


The scheme intends to provide financial assistance and other handholding support to the MSMEs for converting their non-productive assets into productive assets.

Sick Unit

An MSME would be considered sick under the following conditions:

  • Any of the borrowal accounts of the unit remains substandard for more than six months.
  • The MSME unit has been in commercial production for at least one year for working units and two years for a closed unit.
  • If there is an erosion in the net worth occurred due to accumulated cash losses to the amount of 50% of its net worth during the previous accounting year.

Closed Unit

An MSME is considered as a closed unit if the unit has been remained closed continuously for six months. This must be supported with the proof such as electricity disconnection due to closure or commercial tax returns for this period is nil.

Stressed MSME

As per the notification released under the Reserve Bank of India (RBI), an MSME can be treated as stressed if:

  • Principal or interest payment delayed for more than 30 days but account showing signs of incipient stress
  • Principal or interest payment delayed between 31-60 days.
  • Principal or interest payment delayed between 61-90 days.

Eligibility Criteria

The eligibility criteria to obtain financial assistance under the scheme are explained in detail below:

  • Any MSME having Entrepreneurs Memorandum (EM Part-II) or Udyog Aadhar under the MSME Development Act, as manufacturing enterprise is eligible for this scheme.

Note: The assistance subject to a maximum limit of Rs.5 lakhs per unit will be provided as one-time assistance. The industries notified under the negative list such as units started by Government controlled agencies, Government controlled industries, Public sector undertakings, units financed by KVIC/KVIB are not eligible for any assistance under this scheme.

Quantum of Assistance

The assistance provided under this MSME revival scheme are specified below:

Margin Money Grant

The assistance of 50% of the margin required by the financial institution or banks towards the additional working capital loan and term loan is payable as financial assistance limited to Rs.2 lakhs.

Restructuring of Existing Loan Account

If the bank is interested in restructuring the existing loan amount and extent additional working capital loan or term loan based on the recommendations of Expert Committee for revival project, the unit is eligible for the one-time assistance. Also, this assistance is eligible for self-financed units availing working capital or term loan as part of the revival package suggested by the Expert Committee.

Interest Subvention Scheme

The assistance in the form of interest subvention on a reimbursement basis for the additional working capital loan and term loan can be availed by the eligible units.

The interest subvention will be provided for the 1st year of the loan sanctioned by the financial institution or banks subject to the maximum amount of Rs.1 lakh per annum.


  • First Instalment: The interest subsidy of 3% from the total subsidy, i.e. (6%) will be issued within 60 days from the day of loan released by the banks or financial institution.
  • Second Instalment: The balance 3% of subsidy will be released after the completion of 12 months of successful running of the unit which will be decided based on the report from the concerned banks or financial institution.

Restart Expenses

Based on the recommendations of the Export Committee, the following one-time assistance will be provided.

  • In case no term loan is availed for the purchase of new plant and machinery, 50% of the cost of Plant and Machinery subjected to a limit of Rs.1.50 lakhs will be provided as one-time assistance.
  • To the extent of 50% of the cost occurred for the necessary repair and maintenance of existing Plant and Machinery limited to Rs.1 lakh will be provided.

Cost of Revival Project Report

The Cost of preparation of Revival Project Report (RPR) will be reimbursed at the rate of 100% not exceeding the amount of Rs.10,000 per unit.

Selection of Beneficiaries

The following selection committee will select the beneficiaries to participate under the MSME revival scheme.


Selection Committee

1. District Collector Chairman
2. General Manager, DIC Convenor
3. District President KSSIA Member
4. Lead Bank Manager Member
5. District Manager, KFC Member
6. Deputy Cheif Engineer, KSEB Member
7. Deputy Commissioner, GST Member
8. Representative of MSME Member
9. Quorum of the Committee Member
10. Representative of concerned banks or financial institution Member

Documents Required

The required documents are to be submitted along with the application form of MSME revival.

  • Copy of Entrepreneurs Memorandum (EM) part II or UAM .
  • Copy of detailed Revival Project Report (RPR)
  • Copy of sanction letter for additional loan, if required
  • Proof of new investment, if required
  • Copy of identity proof of the promoter
  • Copy of partnership deed, Memorandum, Articles of Association (AOA), bye-laws in case of units other than proprietory has to be self-attested.

Application Procedure for Revival of MSME

Any industrial units which satisfy the conditions as mentioned above can forward the application through their financing agency or directly to the General Manager, District Industries Centre concerned in the prescribed application form. Also, the self-financing units can apply for assistance directly to the concerned General Manager.

  •  On receipt of the form, the acknowledgement will be given to the applicant for further reference. The financing agencies will forward cases of viable sick units to the Concerned General Manager, District Industries Centre, with their guidance on rehabilitation package. In the case of more than one financing agency, the General Manager should get clearance from all other financiers. The General Manager would maintain a register for assuring the seniority of applications which are received with all supporting documents, date and time.
  • The General Manager will forward the proposal along with Revival Project Report and other documents on recommendation from the financial institution and to the Expert Committee constituted for appraisal of the proposal. Based on the guidelines under this scheme, the Expert Committee evaluates the proposal and with the clear recommendation, whether the proposal is eligible for assistance or not, and should be produced on before of General Manager. And based on the seniority in the application register, General Manager will prepare a seniority list of recommended applications for revival.
  • With the recommendations and appraisal of the Expert Committee, the General Manager will submit the proposals of viable sick units, in the District Level Rehabilitation Committee called ‘Vyavasayamithra’. This committee is responsible for sanctioning financial assistance based on the guidelines of this scheme. The Assistances sanctioned by the “Vyavasayamithra” would be released to the applicant by the General Manager after executing the agreement in stamp paper by the applicant.

Note: The release of assistance would be strictly based on the seniority list prepared.