Union Minister Nitin Gadkari has rolled out the Credit Guarantee Scheme for subordinate debt to provide Rs 20,000 crore of guarantee cover to two lakh micro, small and medium enterprises (MSMEs). The funding scheme to help the distressed MSME sector entails a sub debt facility to the promoters of those operational MSMEs that are distressed or nonperforming assets (NPAs). It is also called the 'Distressed Assets Fund Subordinate Debt for MSMEs'.
According to the scheme, the guarantee cover worth Rs 20,000 crore will be provided to the promoters who can take debt from the banks to further invest in their stressed MSME units as equity. It was being felt that the biggest challenge for stressed MSMEs was in getting capital either in the form of debt or equity. Therefore, as part of Atmanirbhar Bharat package, on May 13, 2020, Finance Minister Nirmala Sitharaman had announced this scheme of subordinate debt to the promoters of operational but stressed MSMEs.
It is expected that this scheme would provide much required support to around two lakh MSMEs and will help in reviving the economic activity in and through this sector. It will also help in protecting the livelihoods and jobs of millions of people who depend on them. Promoters of MSMEs meeting the eligibility criteria may approach any scheduled commercial banks to avail benefit under the scheme. The scheme will be operationalised through Credit Guarantee Fund Trust for MSEs (CGTMSE).
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