Executive Summary:
The Reserve Bank of India (RBI) released a notification regarding the Interest Subvention Scheme for MSMEs 2018, announced by the Government of India on November 2, 2018. The Small Industries Development Bank of India (SIDBI) is the nodal agency for the scheme. Scheduled Commercial Banks, including Regional Rural Banks, are requested to implement the scheme and issue necessary instructions to their branches and controlling offices.
Key Points / Main Content:
* **Scheme Overview:**
* The Interest Subvention Scheme for MSMEs 2018 aims to encourage productivity and incentivize MSMEs to onboard the GST platform, promoting formalization and reducing credit costs.
* The scheme operates for financial years 2019 and 2020.
* **Eligibility Criteria:**
* MSMEs must have a valid Udyog Aadhar Number (UAN) and GSTN.
* Incremental or fresh term loans or working capital extended from November 2, 2018, are eligible.
* Coverage is limited to ₹100 lakh per MSME, even with both term loan and working capital facilities.
* MSME exporters availing interest subvention under the Department of Commerce are ineligible.
* MSMEs already availing interest subvention under other State/Central Government schemes are ineligible.
* **Operational Formalities:**
* Interest relief is calculated at 2% per annum on the outstanding balance from the date of disbursal or notification, whichever is later.
* Interest rates charged to MSMEs must conform to the Code of Ethics and Fair Practices Code as per RBI guidelines.
* Loan accounts declared as Non-Performing Assets (NPA) are ineligible for interest subvention for the period they remain NPA.
* **Claim Submission:**
* Nodal offices of lending institutions must submit half-yearly claims to SIDBI in the prescribed format (Annex I, II, and III).
* Claims must be certified by the statutory auditors, verifying individual accounts, lending amounts, interest charged, and the claim amount.
* Claims are submitted to the Chief General Manager, Institutional Finance Vertical, SIDBI, Mumbai.
* Disbursement is subject to fund release from the Ministry of MSME (MoMSME).
* **Other Covenants:**
* SIDBI acts as the nodal agency for channeling interest subvention.
* Lending institutions are responsible for accurate data submission and scheme monitoring.
* Interest subvention is released based on certified claims.
* MoMSME is the final authority on all interest subvention matters.
* Receipt of funds by eligible institutions is treated as a Utilization Certificate.
Impact Analysis:
* **Scheduled Commercial Banks (including Regional Rural Banks):**
* *Impact:* Banks are responsible for implementing the Interest Subvention Scheme for MSMEs 2018. They need to identify eligible MSMEs, provide interest subvention, and accurately report claims.
* *Action Required:* Take appropriate action as per the operational guidelines, issue necessary instructions to branches and controlling offices, and submit half-yearly claims to SIDBI.
* **MSMEs:**
* *Impact:* Eligible MSMEs can benefit from a 2% interest subvention on fresh or incremental loans, reducing their cost of credit.
* *Action Required:* Ensure they meet the eligibility criteria (UAN, GSTN), apply for fresh/incremental loans from Scheduled Commercial Banks, and comply with the scheme's requirements.
* **SIDBI:**
* *Impact:* SIDBI serves as the nodal agency for the scheme, responsible for channeling the interest subvention to lending institutions.
* *Action Required:* Receive and process claims from lending institutions, ensure data accuracy, and disburse funds subject to availability from the Government of India.
* **Ministry of MSME (MoMSME):**
* *Impact:* MoMSME oversees the scheme and is the final authority on all related matters.
* *Action Required:* Release funds to SIDBI for disbursement and make final decisions on interest subvention matters.
Key Entities Referenced
Reserve Bank of India: The central bank of India, the issuer of this notification.
Interest Subvention Scheme for MSMEs 2018: A scheme announced by the Government of India to provide interest subvention to Micro, Small and Medium Enterprises (MSMEs).
Government of India: The governing authority of India, which announced the Interest Subvention Scheme for MSMEs.
Ministry of Micro, Small and Medium Enterprises: The ministry responsible for the MSME sector in India, also referred to as MoMSME.
Small Industries Development Bank of India: The single national level nodal implementation agency for the Interest Subvention Scheme for MSMEs, also referred to as SIDBI.
Scheduled Commercial Banks: Banks eligible to extend term loans or working capital under the scheme
Mumbai, Maharashtra: Location of SIDBI's Institutional Finance Vertical, where claims are to be submitted.
Financial Year 2019: One of the financial years for which the scheme will be in operation.
भारतीय �रज़व र् बक�
__________________________ RESERVE BANK OF INDIA ________________________
www.rbi.org.in
RBI/2018-19/125
FIDD.CO.MSME.BC.No.14/06.02.031/2018-19 February 21, 2019
The Chairman/Managing Director & CEOs
All Scheduled Commercial Banks
(including Regional Rural Banks)
Madam/Dear Sir,
Interest Subvention Scheme for MSMEs
As you are aware, Government of India, on November 2, 2018, has announced ‘Interest
Subvention Scheme for MSMEs 2018’.
2. A copy of the salient features and operational guidelines for implementation of the
captioned scheme, released by the Ministry of Micro, Small and Medium Enterprises
(MSME), Government of India, is enclosed. Small Industries Development Bank of India
(SIDBI) is the single national level nodal implementation agency for the scheme.
3. You are requested to take appropriate action as envisaged for banks in the said
operational guidelines and issue necessary instructions to your branches /controlling offices
for successful implementation of the scheme.
4. Kindly acknowledge receipt.
Yours faithfully,
(Sonali Sen Gupta)
Chief General Manager
Encl. as above
िवत् तीय समावेशन और िवकास िवभाग,क��ीय कायार्लय, 10वीमंिजल, क��ीय कायार्लय भवन, पो.बा.सं.10014, मुंबई 400 001
टेलीफोन /Tel.No: 91-22-22661000 फैक्स/Fax No: 91-22-22621011/22610948/22610943
ई-मेल/ Email ID:cgmincfidd@rbi.org.in
Financial Inclusion & Development Department, Central Office, 10thFloor, C.O. Building, Post Box No.10014, Mumbai
400 001
�हदंी आसान है, इसका �योग बढ़ाइये
“चेतावनी�रज़व र्बक� �ारा - :मेल, डाक, एसएमएस या फोन कॉल के ज�रए �कसी क� भी व्य ि�गत जानकारी जसै ेबक� के खात ेका ब्य ौरा, पासवडर् आ�द नह� मागंी
जाती ह।ै यह धन रखन ेया दने ेका �स्त ाव भी नह� करता ह।ै ऐस े�स्त ाव� का �कसी भी तरीके स ेजवाब मत दीिजए।"
Caution: RBI never sends mails, SMSs or makes calls asking for personal information like bank account details, passwords, etc. It never keeps or
offers funds to anyone. Please do not respond in any manner to such offers.Interest Subvention Scheme for MSMEs 2018
1. Background:
The Micro, Small and Medium Enterprises [MSME] sector is a significant contributor towards
building up of a strong and stable national economy. Hon’ble Prime Minister while launching
outreach initiative for MSME sector on November 2nd, 2018 highlighted that access to credit,
access to market, technology upgradation, ease of doing business and a sense of security
for employees are five key aspects for facilitating MSME sector. Twelve announcements
have been made to address each of these five categories. As part of access to credit, Prime
Minister announced 2% interest subvention for all GST registered MSMEs, on fresh or
incremental loans.
Ministry of MSME (MoMSME) has decided that a new scheme viz. “Interest Subvention
Scheme for Incremental credit to MSMEs 2018” will be implemented over 2018-19 and
2019-20.
2. Salient Features of the Scheme
2.1 Purpose, Scope and Duration
The Scheme aims at encouraging both manufacturing and service enterprises to increase
productivity and provides incentives to MSMEs for onboarding on GST platform which helps
in formalization of economy, while reducing the cost of credit. The Scheme will be in
operation for a period of two financial years FY 2019 and FY 2020.
2.2 Eligibility for Coverage
(i) All MSMEs who meet the following criteria shall be eligible as beneficiaries under
the Scheme:
a. Valid Udyog Aadhar Number [UAN]
b. Valid GSTN Number
(ii) Incremental term loan or fresh term loan or incremental or fresh working capital
extended during the current FY viz. from 2nd November 2018 and next FY would
be eligible for coverage.
(iii) The term loan or working capital should have been extended by Scheduled
Commercial Banks.
(iv) In order to ensure maximum coverage and outreach, all working capital or term
loan would be eligible for coverage to the extent of ₹100 lakh only during the
period of the Scheme.
(v) Wherever both the facilities working capital and term loan are extended to a
MSME by an eligible institution, interest subvention would be made available for
a maximum financial assistance of ₹100 lakh.(vi) MSME exporters availing interest subvention for pre-shipment or post-shipment
credit under Department of Commerce will not be eligible for assistance under
Interest Subvention Scheme for Incremental credit to MSMEs 2018.
(vii) MSMEs already availing interest subvention under any of the Schemes of the
State / Central Govt. will not be eligible under the proposed Scheme.
2.3 Operational formalities
1. The interest relief will be calculated at two percentage points per annum (2% p.a.),
on outstanding balance from time to time from the date of disbursal / drawal or the
date of notification of this scheme, whichever is later, on the incremental or fresh
amount of working capital sanctioned or incremental or new term loan disbursed by
eligible institutions.
2. The interest rates charged to MSMEs shall conform to Code of Ethics and Fair
Practices Code as published by respective institutions (as per extant RBI guidelines)
and linked to the respective internal / external rating of the MSME as per applicable
interest rate guidelines of the institution.
3. The loan accounts on the date of filing claim should not have been declared as NPA
as per extant guidelines in force. No interest subvention shall be admissible for any
period during which the account remains NPA.
2.4 Claim Submission
1. Nodal office of eligible lending institutions should submit their half yearly claims to
SIDBI as per the format given in Annex I. Information with respect to loans
disbursed and interest relief claimed (branch-wise) shall be submitted in soft copy in
excel in the format given in Annex II.
2. The format for compilation of data by branches of eligible institutions is given in
Annex III. The same may be submitted by the branches to their Controlling Offices /
Head Offices.
3. All claims have to be duly certified by the statutory auditors of the eligible
institutions. The certificate shall include statement on verification of individual
accounts with regard to amount, incremental / fresh lending, interest charged and
amount claimed. Lending institutions shall ensure that total relief claimed as indicated
in Annex I, II and III are matched.
4. The Half Yearly claims shall be submitted to the Chief General Manager, Institutional
Finance Vertical, SIDBI, Mumbai.
5. Disbursement against each claim to individual institution shall be only after release of
funds from MoMSME.2.5 Other covenants
1. SIDBI shall act as a Nodal Agency for the purpose of channelizing of interest
subvention to the various lending institutions through their Nodal office.
2. All lending institutions shall be responsible for submission of the accurate data and
monitoring of the scheme.
3. The interest subvention would be released only on the basis of claim duly certified
by the Statutory Auditors of the eligible institutions. SIDBI shall not be liable for any
inaccurate submission of data by lending institutions.
4. Interest subvention amount shall be released by SIDBI subject to availability of funds
from GOI. Also, MoMSME, GOI will be the final authority for all interest subvention
related matters and their decision would be final and binding. Receipt of funds by
the eligible institutions would be treated as Utilization Certificate of the Fund.
---------------xx---------------xx-------------ANNEX I
Format of Certificate for claiming Subsidy
(Hard copy to be submitted to SIDBI)
Name of Lending Institution:
(Amounts in Rupees)
Fresh or Incremental funded Assistance on or Amount of Interest Relief Claimed
after November 02, 2018*
MSME MSME (Service Total MSME MSME Total
(Manufacturing) sector) (Manufacturing) (Service
sector)
(1) (2) (3) (4) (5) (6)
*This may be calculated by arriving at the difference between the opening balances viz. the
principal outstanding as on November 01, 2018 minus any interest accrued.
Note:
i. Data for term loan and working capital accounts may be furnished separately.
ii. NPA accounts may be excluded as no interest subvention shall be admissible for any period
during which the account remains NPA.
We hereby certify that the amounts of Fresh or Incremental Working capital sanctioned/
incremental/ new Loan disbursements and interest relief being claimed thereon, as shown
above, have been correctly calculated in conformity with the Circular issued by SIDBI. We
undertake that in the event of any inaccuracy detected later during audit or otherwise, we
shall immediately refund to SIDBI any excess amount received by us.
(Authorized Signatory)
Place & Date
We hereby certify that we have verified the individual accounts with regard to amount,
incremental / fresh lending, interest charged and amount claimed.
Signature of Statutory Auditor
Place:
Date:
The certificate should be signed by the CA, and his membership number with ICAI should be
indicated
Please note this certificate is to be submitted duly certified by the statutory auditor of the lending
institution; a copy of the lending institutions fair practice code and interest rate chart mapped to
internal/external ratings is to be annexed with the claim.Annex II
Format for – Branch wise Data to be submitted
(Soft version only to be submitted)
(Amounts in Rupees)
S. Branch Fresh or Incremental funded Funded assistance Amount of Interest Relief
No. name Assistance on or after November disbursed claimed
and 02, 2018 eligible for subsidy
code
MSME MSME Total MSME MSME Total MSME MSME Total
(Manufactur (Service (Manufact (Service (Manufact (Service
ing) Sector) uring) Sector) uring) Sector)
(1) (2) (3) (4) (4) (5) (6) (7) (8) (9) (10)Annex III
एमएसएमई लाभा �थयर् � के स ंबधं म � �ा� प Form at for MSME Benefic iary
अन सु िू चत वािणिज्यक बक� Nam e of the Sche duled C ommercial Ban k :
शाखा का नाम क्षे�ीय कायार्लय
Name of the Branch Regional Office आंचिलक कायार्लय Zonal office
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नोट:
Note: 1.कृपया एमएस-एक्सेल ��प म� आँकड़े भेज� / Please send the data in Ms-excel format
2.कृपया कोई स्तंभ �र� न छोड� / Please do not leave any column blank.
3.कृपया �ा�प म� कोई प�रवतनर् न कर� / Please do not change the format.