Minister of MSME, Shri Nitin Gadkari on June 24, 2020 launched the Credit Guarantee Scheme for Sub-ordinate Debt (CGSSD) which is also called “Distressed Assets Fund–Sub-ordinate Debt for MSMEs”. The scheme was launched from Nagpur.
Main Features
The guarantee cover worth Rs. 20,000 crores will be provided to the promoters who can take debt from the banks to further invest in their stressed MSMEs as equity.
This Scheme seeks to extend support to the promoter(s) of the operational MSMEs which are stressed and have become NPA as on 30th April, 2020;
Promoter(s) of the MSMEs will be given credit equal to 15% of their stake (equity plus debt) or Rs. 75 lakh whichever is lower;
Promoter(s) in turn will infuse this amount in the MSME unit as equity and thereby enhance the liquidity and maintain debt-equity ratio;
90% guarantee coverage for this sub-debt will be given under the Scheme and 10% would come from the concerned promoters;
There will be a moratorium of 7 years on payment of principal whereas maximum tenor for repayment will be 10 years.
Benefits
It is expected that this scheme would provide much required support to around 2 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.
