The Central Government has announced Bailout Package for MSMESs Sector vide Press Release ID: 1846944 dated 01st August, 2022 and has operationalised Aatma Nirbhar Bharat Package for MSMEs to cope up with the COVID-19 crisis.
The Ministry has operationalised Emergency Credit Line Guarantee Scheme (ECLGS), Credit Guarantee Scheme for Subordinate Debt (CGSSD) and Self Reliant India (SRI) fund under Aatma Nirbhar Bharat package. This information is provided by Minister of State for Micro Small and Medium Enterprises, Shri Bhanu Pratap Singh Verma, to the Rajya Sabha.
1. Emergency Credit Line Guarantee Scheme (ECLGS):
- The Finance Ministry of India launched the Emergency Credit Line Guarantee Scheme (ECLGS) in May 2020 (13.05.2020_to help the pandemic hit economy.
- EMERGENCY CREDIT LINE GUARANTEE SCHEME (ECLGS) launched by Government of India as a special scheme in view of COVID-19 crisis to provide 100% guarantee coverage to Banks and NBFCs to enable them to extend emergency credit facilities to Business Enterprises / MSMEs in view of COVID-19 to meet their additional term loan/additional working capital requirements.
- This scheme aimed to provide Rs.3 lakh crore of unsecured loans to MSMEs and business enterprises to mitigate the distress caused by the coronavirus-induced lockdown.
- The ECLGS is being extended up to March 2023 with an expanded guarantee cover of Rs. 5 lakh crore.
- The additional guarantee cover of Rs. 50,000 crore is earmarked exclusively for exclusively for hospitality and related enterprises.
2. Self – Reliant India (SRI) Fund:
- The Government of India has announced Fund of Funds as a part of Aatma Nirbhar Bharat Package in May, 2020 ,with the nomenclature Self Reliant India (SRI) Fund to infuse as equity funding in MSMEs which have the potential and viability to grow and become large units.
- This initiative is aimed at providing growth capital to the deserving and eligible units of MSME sector.
- SRI Fund, in the form of Category II Alternative Investment Fund (AIF), will be oriented towards providing funding support to the Daughter Funds for onward provision to MSMEs as growth capital, in the form of equity or quasi-equity.
- MSMEs, defined as per the MSMED Act, as amended from time to time, shall be eligible for consideration.
- Govt. of India will be the sole anchor investor and provide an initial budgetary support of Rs. 10,000 crore to the Mother Fund in phased manner. No other outside investment will be entertained in the Mother Fund.
3. Credit Guarantee Scheme for Subordinate Debt (CGSSD):
- Shri Nitin Gadkari, MSME Minister, had launched the Credit Guarantee Scheme for Sub-ordinate Debt (CGSSD) which is also called “Distressed Assets Fund–Sub-ordinate Debt for MSMEs”.
- This scheme was announced in May 2020 as a part of Aatma Nirbhar Bharat Package with a view to provide credit facility to the promoters of stressed MSMEs viz. SMA-2 and NPA accounts who are eligible for restructuring as per RBI guidelines on the books of the lending institutions.
- Under the scheme, the promoter would infuse the credit in the MSME as quasi equity or sub-debt.
- The guarantee covers worth Rs. 20,000 crores will be provided to the promoters who can take debt from the banks to further invest in their stressed MSMEs as equity.
- 90% guarantee coverage would come from scheme/ Trust and remaining 10% from concerned promoter(s) on the credit extended by MLIs under the scheme. The guarantee cover would be uncapped, unconditional and irrevocable credit guarantee.
- Benefit is available after completion of necessary formalities including approval of CCEA and consultation with Finance Ministry, SIDBI and RBI among others.
According to the study made by Small Industries Development Bank of India (SIDBI) reveals that around 65% of the MSMEs surveyed, have availed the benefits of Emergency Credit Line Guarantee Scheme (ECLGS). According to the study made by National Institute of Bank Management (NIBM) reveals that under ECLGS, the loans were fairly easy to obtain, cost effective, helpful to fulfil short term financial needs, eased cash flow burden.
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