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The Government of India has decided to include Co-operative Banks as Eligible Lending Institutions whereby their MSMEs (micro, small and medium enterprises) borrowers can get interest subvention with effect from March 3, 2020.
The Government had announced the ‘Interest Subvention Scheme for MSMEs 2018’ on November 2, 2018, for Scheduled Commercial Banks.
The scheme provides for an interest relief of 2 per cent per annum to eligible MSMEs on their outstanding new/incremental term loan/working capital during the period of its validity, the RBI said in a notification issued to Primary (Urban) Co-operative Banks, State Co-operative Banks and District Central Co-operative Banks.
The coverage of the scheme is limited to all term loans/working capital to the extent of ₹1 crore.
As per the scheme, the loan accounts on the date of filing claim should not have been declared as NPA (non-performing asset) as per the extant guidelines in force.
No interest subvention shall be admissible for any period during which the account remains NPA.
Modified guidelines
The Government has modified the operational guidelines of the scheme, whereby its validity has been extended till March 31, 2021.
Accordingly, new or incremental term loan/working capital limit extended by co-operative banks with effect from March 3, 2020 will be eligible for coverage under the scheme.
Under the modified guidelines, acceptance of claims in multiple lots for a given half-year by eligible institutions is permitted.
“Requirement of Udyog Aadhaar Number (UAN) may be dispensed with for units eligible for GST. Units not required to obtain GST may either submit Income Tax Permanent Account Number (PAN) or their loan account must be categorized as MSME by the concerned bank.
“Trading activities have also been allowed to be covered under the scheme without UAN,” according to the modified guidelines.
Small Industries Development Bank of India (SIDBI) is the single national-level nodal implementation agency for the scheme.
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