Prime Minister Shri Narendra Modi on 13-May-2020 announced various measures under the umbrella Atmanirbhar Bharat Abhiyaan. That means a self reliant India movement.There are lot of presentations on this Rs. 20 Lakh crore package. I am going to write in my MSME series, each schemes in a nutshell.
The Atmanirbhar Bharat Abhiyaan has 5 pillars
(1) Economy : That can take a quantum leap
(2) Infrastructure : World class one with Indian identity
(3) System ; More technology driven arrangements
(4) Vibrant Demography : The energy source for a self-reliant India
(5) Demand : Utilizing fully the strength of our demand and supply chain
I was looking for an acronym for the 5 pillars. Finally, managed to get VIBRANT DESI (Demand, Economy, System and Infrastructure). Happy to get interesting acronym in the comments.
Emergency Credit Line Guarantee Scheme.
In the first of this MSME series, I am going to give a snapshot of the Rs.3 lakh crores Emergency Credit Line Guarantee Scheme.
Objective
Additional funding without any collateral to MSMEs who is trying to mitigate the economic distress due to the pandemic situaion.
Amount available under the scheme
Rs.3 lakh crores by way of Guarantee from the governement
Period this Scheme is available
Can be availed till 31-Oct-220 OR till the Rs.3 lakh crore santioned, whichever is earlier
Who can avail this benefit? Please see the FAQ
All MSME borrowers with combined outstanding loans of up to Rs 25 crore as on February 29, 2020, and annual turnover of up to Rs 100 crore in FY 2019-20. Pradhan Mantri Mudra Yojana (PMMY) borrowers are eligible.
What is the tenor for this additional loan
4 years with a moratorium of 12 months on principal repayment.
What is the additional security, collateral or guarantee required?
No additional security, collateral or guarantee required for this additional loan
What is the interest rate?
For Banks and Financial Institution, RBI prescribed external benchmark linked rates +1%, subject to a maximum of 9.25% pa.
For NBFCs, the interest rate shall not exceed 14% pa
What is the form of this additional loan?
Banks or FIs : Working Capital Loan
NBFCs : Term Loan
Frequently asked questions on ECLGS
(1) Who are all eligible?
All MSME borrowers with
NPA : a loan account which has remain overdue for 90 days or more is classified as a NPA or Non-Performance Assets.
(4) The accounts are not audited yet. What to do?
In case accounts for FY 2019-20 are yet to be audited/finalized, the lender may rely upon the borrower’s declaration of turnover.
(5) Will MSME get 20% of the outstanding as of 29-Feb-2020 as loan?
The scheme says upto 20%. So, if the bank decides, basis your track record, can give less than 20% also.
The banks were asked to exercise diligence in extending the loan. So, it is not the automatic 20% extended.
(6) MSME have multiple lenders, who will provide loan?
If the combined borrowing is less than Rs.25 crores, each lender can provide proportionately.
If the combined borrowing is more than Rs.25 crores, you are not eligible.
If the other lenders give no objection certificate (NOC), one lender can give the additional 20% (but the quantum cannot exceed 20% of the combined loan balance as of 29-Feb-2020 with all lenders)
(7) Can MSME get more than 20% of outstanding as of 29-Feb-2020?
YES & NO
Yes, if you have multiple lenders and other banks give NOC to one lender, the lender will give more than 20% of his loan balance.
No, as in any case it cannot exceed your combined loan outstanding as of 29-Feb-2020
(8) Is MSME registration / Udyog Aadhar required?
Nowhere it talked about this condition. So, MSME registration or Udyog aadhar is not a must to avail this additional loan.
(9) Are there any processing fee
Since this is an extension of existing loan, no processing fee shall be charged.
(10) Is all loans and facilities covered?
No. Only fund based loans are covered. Non fund based, off-balance sheet facilities are not covered.
(11) What are the repayment terms?
After the 12 months moratorium for principal amount, the amount can be repaid in 36 equal monthly instalments
(12) Can I repay the amount earlier in part or full?
Yes, you can. There will not be any pre-payment penalty charges for this.
These are my understanding on reading the scheme. Please check with your banker, consultant for your eligibility.
Please rush, if you need the credit, as it is first come first served. Though the scheme is open till 31-Oct-2020, if the Rs.3 lakh crores sanctioned earlier, you may miss the bus.
Good luck !
The Atmanirbhar Bharat Abhiyaan has 5 pillars
(1) Economy : That can take a quantum leap
(2) Infrastructure : World class one with Indian identity
(3) System ; More technology driven arrangements
(4) Vibrant Demography : The energy source for a self-reliant India
(5) Demand : Utilizing fully the strength of our demand and supply chain
I was looking for an acronym for the 5 pillars. Finally, managed to get VIBRANT DESI (Demand, Economy, System and Infrastructure). Happy to get interesting acronym in the comments.
Emergency Credit Line Guarantee Scheme.
In the first of this MSME series, I am going to give a snapshot of the Rs.3 lakh crores Emergency Credit Line Guarantee Scheme.
Objective
Additional funding without any collateral to MSMEs who is trying to mitigate the economic distress due to the pandemic situaion.
Amount available under the scheme
Rs.3 lakh crores by way of Guarantee from the governement
Period this Scheme is available
Can be availed till 31-Oct-220 OR till the Rs.3 lakh crore santioned, whichever is earlier
Who can avail this benefit? Please see the FAQ
All MSME borrowers with combined outstanding loans of up to Rs 25 crore as on February 29, 2020, and annual turnover of up to Rs 100 crore in FY 2019-20. Pradhan Mantri Mudra Yojana (PMMY) borrowers are eligible.
What is the tenor for this additional loan
4 years with a moratorium of 12 months on principal repayment.
What is the additional security, collateral or guarantee required?
No additional security, collateral or guarantee required for this additional loan
What is the interest rate?
For Banks and Financial Institution, RBI prescribed external benchmark linked rates +1%, subject to a maximum of 9.25% pa.
For NBFCs, the interest rate shall not exceed 14% pa
What is the form of this additional loan?
Banks or FIs : Working Capital Loan
NBFCs : Term Loan
Frequently asked questions on ECLGS
(1) Who are all eligible?
All MSME borrowers with
- combined outstanding loans across all lending institutions of upto Rs 25 crore as on 29-Feb-2020
- annual turnover for 2019-20 was up to Rs 100 crore
- GST registration or not required to register under GST
- constitution as
- MSME which are constituted as Proprietorships, Partnerships, Registered Companies, Trusts and Limited Liability Partnerships (LLPs),
- Loans provided in individual capacity will not be covered under the Scheme
- loans under PMMY extended on or before February 29, 2020, and reported on the MUDRA portal shall be covered under the Scheme
(2) What are the other conditions to be met?
- The borrower should be an existing customers and who have availed the credit facility as on 29-Feb-2020
- Borrower accounts should be classified as regular, SMA-0 or SMA-1 as on February 29, 2020. Accounts classified as NPA or SMA-2 as on February 29, 2020 will not be eligible under the Scheme
- The MSME borrower must be GST registered in all cases where such registration is mandatory. This condition will not apply to MSMEs that are not required to obtain GST registration
(3) What are SMA-0, SMA-1, SMA2 & NPA
These are the categories that RBI created to have an early warning signals of a stressed account with Banks, Financial Institutions and NBFCs.
SMA stands for Special Mention Accounts.
These are the categories that RBI created to have an early warning signals of a stressed account with Banks, Financial Institutions and NBFCs.
SMA stands for Special Mention Accounts.
| SMA Sub-categories | Basis for classification – Principal or interest payment or any other amount wholly or partly overdue between |
| SMA-0 | 1-30 days |
| SMA-1 | 31-60 days |
| SMA-2 | 61-90 days |
In case accounts for FY 2019-20 are yet to be audited/finalized, the lender may rely upon the borrower’s declaration of turnover.
It is better to get an audited financial done to avoid any rejection.
(5) Will MSME get 20% of the outstanding as of 29-Feb-2020 as loan?
The scheme says upto 20%. So, if the bank decides, basis your track record, can give less than 20% also.
The banks were asked to exercise diligence in extending the loan. So, it is not the automatic 20% extended.
(6) MSME have multiple lenders, who will provide loan?
If the combined borrowing is less than Rs.25 crores, each lender can provide proportionately.
If the combined borrowing is more than Rs.25 crores, you are not eligible.
If the other lenders give no objection certificate (NOC), one lender can give the additional 20% (but the quantum cannot exceed 20% of the combined loan balance as of 29-Feb-2020 with all lenders)
(7) Can MSME get more than 20% of outstanding as of 29-Feb-2020?
YES & NO
Yes, if you have multiple lenders and other banks give NOC to one lender, the lender will give more than 20% of his loan balance.
No, as in any case it cannot exceed your combined loan outstanding as of 29-Feb-2020
(8) Is MSME registration / Udyog Aadhar required?
Nowhere it talked about this condition. So, MSME registration or Udyog aadhar is not a must to avail this additional loan.
(9) Are there any processing fee
Since this is an extension of existing loan, no processing fee shall be charged.
(10) Is all loans and facilities covered?
No. Only fund based loans are covered. Non fund based, off-balance sheet facilities are not covered.
(11) What are the repayment terms?
After the 12 months moratorium for principal amount, the amount can be repaid in 36 equal monthly instalments
(12) Can I repay the amount earlier in part or full?
Yes, you can. There will not be any pre-payment penalty charges for this.
These are my understanding on reading the scheme. Please check with your banker, consultant for your eligibility.
Please rush, if you need the credit, as it is first come first served. Though the scheme is open till 31-Oct-2020, if the Rs.3 lakh crores sanctioned earlier, you may miss the bus.
Good luck !
1 comments:
Good Summary Gopal Ji!!
Post a Comment