The Ministry of MSME (MoMSME) has implemented the “Interest Subvention Scheme for Incremental credit to MSMEs” vide circular no. FIDD.CO.MSME.BC.No.14/06.02.031/2018-19 dated February 21, 2019. According to the RBI circular, the term loan or working capital extended by Scheduled Commercial Banks to MSMEs are eligible under the scheme. Both manufacturing and service enterprises are eligible for relief at two percentage points per annum (2% p.a.), on outstanding balance from time to time from the date of disbursal / drawal or the date of notification of this scheme, whichever is later, on the incremental or fresh amount of working capital sanctioned or incremental or new term loan disbursed by eligible institutions. Interest subvention would be made available for maximum financial assistance of ₹100 lakh. While extending validity of the scheme till March 31, 2021, the Government has modified following changes from the originally drafted scheme;
Reserve Bank in its earlier circular dated February 5, 2020 said that the statutory auditor’s certificate in respect of interest subvention claim may be submitted by June 30, 2020, and in the meantime settle claims based on internal/concurrent auditor certificate. As per earlier covenants, the interest subvention would be released only on the basis of claim duly certified by the Statutory Auditors of the eligible institutions.
The loan accounts on the date of filing claim should not have been declared as NPA as per the extant guidelines in force. No interest subvention shall be admissible for any period during which the account remains NPA.
It was further clarified by RBI that the Interest subvention amount shall be released by SIDBI subject to the availability of funds from GOI. Also, MoMSME, GOI will be the final authority for all interest subventions related matters and their decision would be final and binding. Receipt of funds by the eligible institutions would be treated as the Utilization Certificate of the Fund.
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