MSMEs with stressed ACs to get a lifeline too


Mumbai: The special package for micro, small and medium enterprises (MSMEs) will also include accounts that are stressed or on the verge of being declared non-performing (NPA), throws a lifeline to these companies. Details of the scheme are still being prepared Small Industries Development Bank of India (Sidbi), which is likely to be the nodal agency for implementation.

But bankers said loans will be offered to all businesses regardless of their repayment history. “All SMA 0 to SMA 2 accounts considered standard in bank loans qualify without any restriction. For MSMEs already declared as NPAs, Rs 20,000 crore fund is used from which they can borrow and add capital to their businesses.

The only qualification is for the units to be in production and there should be no fraud or things like that, ”said the CEO of Indian Banks’ Association Sunil Mehta. On Wednesday, Finance Minister Nirmala Sitharaman announced that Rs 3 lakh crore of free collateral will be offered to MSMEs for up to 20% of their outstanding loans at the end of February. Borrowers with up to Rs 25 crore outstanding loan and Rs 100 crore turnover are eligible for a four-year loan with a 12-month moratorium on repayment of principal.

The government will provide 100% credit guarantee to banks and NBFCs on principal and interest. The scheme can be used until October 31, and MSMEs are not required to offer fresh security. SMA or special mention accounts are accounts where interest payment is delayed. It is classified as SMA 0 for delays from 0 to 30 days, SMA 1 for 31 to 60 days and SMA 2 from 61 to 90 days. Payments not made over 90 days are classified as NPAs.

For such NPA accounts, there is another Rs 20,000 crore package through which promoters of stressed MSMEs can add equity to their businesses. The government will provide Rs 4,000 crore support to Sidbi-managed Credit Guarantee Fund Trust for Micro and Small businesses (CGTMSE), which in turn provides credit guarantee support to banks. Bankers said 75% of the merger infusion for this scheme will be through short-term loans from banks, while 25% of the funds will be provided by the government through CGTMSE.

“The second scheme is especially for NPA accounts that have producing units but need capital to survive. These sick entities can tap both Rs 20,000 crore fund for capital and also Rs 3 lakh crore in concessional loans. The debt taken through the Rs 20,000 crore scheme will be treated as subordinated debt and will therefore only be repaid once the bank loans have been paid off, ”said Mehta.





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