Tag: MSME Loans in India

Categories
MSME

Bank of Maharashtra Aims To Resolve About 25 Stressed MSME Loans Under Pre-Packaged Insolvency Resolution Process

Mumbai, April 24: In a bid to help the stressed micro, small and medium enterprise (MSME) sector, the State-owned Bank of Maharashtra is looking out to roll out a plan at resolving 20-25 stressed MSME accounts under the pre-packaged insolvency resolution process. The news was announced by a senior bank official, a report by PTI said. Earlier this month, the government had introduced a pre-packaged insolvency resolution process for stressed MSMEs by amending the insolvency law.

With the coronavirus pandemic, several sectors have taken a major hit. Bank of Maharashtra’s general manager (credit – large and mid-corporate, MSME) Sanjay Rudra said with the outbreak of the COVID-19 crisis, the stress on hospitality, luxury retail, tour operators, lodging and restaurant operators has increased considerably. “I expect around 20-25 stressed MSME accounts to be resolved under the pre-packaged insolvency resolution regime in the coming months,” he said.

Rudra said this during a webinar organised by MVIRDC World Trade Center, Mumbai and All India Association of Industries.

Here’s how to stressed MSME would benefit:

  1. Under a pre-packaged process, main stakeholders such as creditors and shareholders come together to identify a prospective buyer and negotiate a resolution plan before approaching the National Company Law Tribunal (NCLT).
  2. Rudra said under the pre-packaged insolvency resolution system, the government has given an opportunity for MSMEs to resolve their stress at an early stage while holding control over their business.
  3. “Now, MSMEs should maintain complete transparency in the whole resolution process to regain trust and confidence of lenders,” Rudra said.

Meanwhile, AZB & Partners cofounder Bahram N Vakil said MSME promoters should file for resolution with the NCLT only after having a robust base plan. According to a report by PTI, Vakil said that if the promoters could come out with a resolution plan with a minimum possible haircut for operational creditors and if it is also acceptable to the committee of creditors, then the chances of such plans being challenged in the Swiss challenge auction are less.

 

 

Categories
MSME

MSME Sector in India Gets Major Boost As Banks Sanction Rs 2.05 Lakh Cr Loans to 81 Lakh MSMEs Under Credit Guarantee Scheme

New Delhi, December 12: With an aim to help the MSME sector which was impacted by disruptions caused due to the coronavirus pandemic, the Finance Ministry on Friday said banks have sanctioned loans worth Rs 2,05,563 crore to about 81 lakh accounts under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector. In a series of tweets, the Finance Ministry said that as many as 40 lakh MSME accounts have received Rs 1,58,626 crore till December 4. Another tweet informed that Rs 3 lakh cr Collateral-Free Guaranteed Loans – Budgetary provision of Rs 4,000 crore made for the Scheme in First Supplementary Demand for Grants for FY 2020-21.

While announcing the Aatmanirbhar Bharat Package 3.0, Finance Minister Nirmala Sitharaman had said that Rs 2.05 lakh crore sanctioned and Rs 1.52 lakh crore disbursed under ECLGS 1.0. “As part of the Atmanirbhar Bharat Abhiyan 3.0 (announced on November 12), ECLGS Scheme has been extended through ECLGS 2.0 for the 26 stress sectors and health care sector with credit outstanding of above Rs 50 crore and up to Rs 500 crore as on February 29, 2020,” a tweet said. Credit Guarantee Scheme: Banks Sanction Rs 1.86 Lakh Cr to 50 Lakh MSMEs Impacted by Slowdown Amid COVID-19 Pandemic.

The Finance Ministry said that under ECLGS 2.0, entities with outstanding credit above Rs 50 crore and not exceeding Rs 500 crore as on February 29, 2020, which were less than or equal to 30 days past due as on February 29, 2020 are eligible. The loans provided under ECLGS 2.0 will have a five-year tenor, with a 12-month moratorium on repayment of principal. Meanwhile, the entire Scheme (ECLGS 1.0 and ECLGS 2.0) valid till March 31, 2021, it said.

As part of the Aatmanirbhar Bharat Package, the government has announced to cover 2.5 crore farmers under the KCC scheme with a credit boost of Rs 2 lakh crore through a special saturation drive.

Categories
MSME

Big Relief for MSMEs! Ahead of Diwali, Govt Waives Interest on Interest for Loans Up to Rs 2 Crore to Help MSME Borrowers Amid COVID-19 Pandemic

New Delhi, October 25: With the onset of the upcoming festive season, the government announced a major relief to borrowers. The Modi government on Friday announced waiver of interest on interest for loans up to Rs 2 crore irrespective of whether moratorium was availed or not. Reports inform that the Department of Financial Services came out with operational guidelines in the backdrop of Supreme Court’s direction to implement the interest waiver scheme. The scheme is likely to cost the exchequer Rs 6,500 crore.

MSME loans, housing loan, education loans, credit card dues, auto loans, consumer durable loans and consumption loans are covered under the scheme. Talking about the eligibility criteria mentioned in the guidelines, the accounts should be standard as on February 29 which means that it should not be Non-Performing Asset (NPA).

On October 14, the top Court had directed the Centre to implement the interest waiver on loans of up to Rs 2 crore  under the RBI moratorium scheme ‘as soon as possible’ in view of the COVID-19 pandemic. The top Court said that the common man’s Diwali is in the hands of the government. As per the guidelines, the scheme can be availed by borrowers in specified loan accounts for a period from March 1 to August 31, 2020. “Borrowers who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs 2 crore (aggregate of all facilities with lending institutions) as on February 29 shall be eligible for the scheme,” it said.

As per the scheme, the lending institutions shall credit the difference between compound interest and simple interest with regard to the eligible borrowers in respective accounts for the said period irrespective of whether the borrower fully or partially availed the moratorium on repayment of loan announced by the RBI on March 27, 2020. The scheme is also applicable on those who have not availed the moratorium scheme and continued with the repayment of loans.

The lending institutions after crediting the amount will claim the reimbursement from the central government. Hearing the matter on October 14, the Supreme Court observed that it was concerned about how the benefit of interest waiver would be given to borrowers and said the Centre has taken a “welcome decision” by taking note of plight of the common man, but authorities have not issued any order in this regard.

A bench headed by Justice Ashok Bhushan had said that ‘Something concrete has to be done’ adding that the benefits of waivers to borrowers up to Rs 2 crore must be implemented as soon as possible. The top court, which posted the matter for hearing on November 2, told the advocates appearing for the Centre and banks that “Diwali is in your hand”.

The Centre recently told the apex court that going any further than the fiscal policy decisions already taken, such as waiver of compound interest charged on loans of up to Rs 2 crore for six months moratorium period, may be “detrimental” to the overall economic scenario, the national economy and banks may not take “inevitable financial constraints”. The top court is hearing a batch of petitions which have raised issues concerning the six-month loan moratorium period announced due to the COVID-19 pandemic.

Categories
MSME

MSME Loans Update: Interest Subvention Scheme on MSMEs Loans Extended Till End of March 31, 2021

Mumbai, October 8: The Reserve Bank of India (RBI) announced that the two percent interest subvention scheme for micro, small and medium enterprises (MSMEs) on loans extended by co-operative banks has now been extended till March 31, 2021. Moreover, the terms of the scheme have also been tweaked. In November 2018, the government had announced the ”Interest Subvention Scheme for MSMEs 2018” for scheduled commercial banks for two financial years 2018-19 and 2019-20. With the new development in place, the scheme has now been extended for the financial year 2020-21.

According to reports, co-operative banks also became as eligible lending institutions effective from March 3, 2020 and the coverage of the scheme is limited to all term loans and working capital to the extent of Rs 100 lakh. The scheme provides for an interest relief of two per cent per annum to eligible MSMEs.

The RBI, in a notification, said certain operational guidelines for the scheme have been further modified by the government. The validity of the scheme has been extended till March 31, 2021. “Accordingly, fresh 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,” RBI said.

A report by PTI said that the 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 categorised as MSME by the concerned bank, the RBI said. Moreover, RBI has asked co-operative banks to take appropriate action as envisaged in the operational guidelines and issue necessary instructions to their branches or controlling offices for successful implementation of the scheme.

Reports inform that according to the scheme, the loan accounts on the date of filing claim should not have been declared as non-performing assets (NPAs). No interest subvention would be admissible for any period during which the account remains NPA.