COVID-19 Relief package for MSMEs under Atmanirbhar Bharat Abhiyan

Financial Stimulus of Rs. 20 lakh crore announced

Amid Coronavirus (COVID-19) outbreak, PM of India announced a financial stimulus of Rs. 20 lakh crore under ‘Atmanirbhar Bharat Abhiyan’ or Self-reliant India Scheme to boost the Indian economy. This relief package of Rs. 20 lakh crore is equivalent to 10% of India’s GDP. Prime Minister of India introduced this movement by naming five pillars of Atmnirbhar Bharat that include Economy, Infrastructure system, Demography and Demand. This financial package shall benefit India’s cottage industry, MSMEs, farmers, laborers and middle class families.

Relief measures for MSMEs

• 3 lakh crore automatic collateral-free loans for businesses, including MSMEs
• 20,000 crore subordinate debt for MSMEs
• MSME loan repayment Tenure of 48 months
• 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs
• MSME loan’s moratorium period offered is 12 months on principal repayment
• 100% Credit Guarantee to banks and NBFCs on principal and interest
• No guarantee fee
• To benefit approx. 45 lakh MSME units
• This scheme can be availed till 31^st Oct 2020
• 30,000 crore liquidity feature for NBFCs, HFCs and MFIs

New MSME Definition

Definition to be revised

Investment limit to be changed upwards

Distinction between manufacturing and service sector to be removed

Enterprise’s turnover criteria to be revised

The distinction between the manufacturing and services enterprises has been removed by making the investment amount and annual turnover similar for enterprises engaged in both the sectors.

Sector/Enterprise Type	Micro Enterprise	Small Enterprise	Medium Enterprise
Manufacturing & Services Sector, Both	Investment less than Rs. 1 crore Turnover less than Rs. 5 crore	Investment less than Rs. 10 crore Turnover up to Rs. 50 crore	Investment less than Rs. 20 crore Turnover up to Rs. 100 crore

Must Read: What is MSME registration? All You Need to Know

Key Measures taken by RBI

RBI announced refinance feature of Rs. 50,000 crore at the policy repo rate to NABARD, SIDBI and NHB

RBI has reduced margins on working capital loans

Moratorium of 3 months on payment of instalments and payment of interest on working capital facilities in respect of all term loans

Rs. 20,000 crore Subordinate Debt for Stressed MSMEs

Government to provide equity support to stressed MSMEs

Operational MSMEs which are stressed or NPAs shall be benefited

Rs. 4000 crore support to CGTMSE to further provide partial Credit Guarantee support to banks

Approximately 2 lakh MSMEs to be benefited under this scheme

MUDRA Loan – Shishu Category

Relief of Rs. 1500 crore to MUDRA Shishu loan borrowers

Rs. 1500 crore Interest subsidy for MUDRA Shishu Loan category

Government of India shall provide Interest discount of 2% for fast recipients for a period of 12 months

Refinance support to NABARD

NABARD will extend additional emergency working capital or refinance support of Rs. 30,000 crore for farmers

Rural Co-operative Banks and Regional Rural Banks shall be the main source for credit

To benefit approximately 3 crore farmers across India

To meet post-harvest (Rabi) and current Kharif requirements in May/June

Read: NABARD Schemes – Functions, Bank Subsidy, Loan and Interest Rate

Additional measures for MSMEs

MSME receivables from Government and CPSEs to be released in 45 days

e-market linkage for MSMEs to act as replacement of trade fairs and exhibitions during the time of COVID