Credit and Finance for MSMEs: The interest subvention scheme for MSMEs, launched by Prime Minister Narendra Modi in November 2018 to give incentives to small businesses for onboarding on GST platform, has been modified to further boost the MSME sector.
Credit and Finance for MSMEs: The interest subvention scheme for MSMEs, launched by Prime Minister Narendra Modi in November 2018 to give incentives to small businesses for onboarding on GST platform, has been modified to further boost the MSME sector. The modifications in operational guidelines were approved by the MSME minister Nitin Gadkari on Monday after consultation from stakeholders including bankers, lending institutions etc. The scheme was launched with 2 per cent interest subvention for all GST registered MSMEs on fresh and incremental loans. The changes were made after banks and other lenders cited ‘operational difficulties’ in the smooth functioning of the scheme.
The changes made to the scheme included settlement of claims based on internal or concurrent auditor certificate and submission of statutory auditor’s certificate once by June 30, 2020, and acceptance of claims in multiple lots for a given half-year by eligible institutions. Among the other improvements made was the requirement of Udyog Aadhar Number (UAN) being done away with for units eligible for GST. Earlier, MSMEs were required to have UAN as well as the GSTN number. Also, the unit not required to obtain GST may either submit Income Tax Permanent Account Number or its loan account must be categorised as an MSME by the concerned eligible institutions.
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The changes made in the guidelines will “lead to the fulfilment of objectives of the scheme, that is, to increase productivity in MSMEs through access to credit at a reduced cost,” Gadkari said in a statement by the MSME ministry. The revised guidelines also extended the last date of claim submission for the half-yearly period ending March 31, 2019, till the end of this calendar year. The government has also made trading activities without UAB eligible.
Gadkari said that the government is committed to boosting credit access to small businesses even as its implementation is being closely monitored to help MSMEs get incremental credit of up to Rs 1 crore with interest subvention of 2 per cent by the government. Lastly, among the changes made was 50 per cent of the estimated claim amounts likely to be given to eligible lenders (at least those belonging to public sector banks) as per the information shared by them and the Utilisation Certificate certified by the respective statutory auditor to submitted by June 2020.