To facilitate loans through Banks to the promoters of stressed MSMEs for infusion as equity / quasi equity in the business eligible for restructuring as per RBI Guidelines.
The Scheme is named as ‘Distressed Assets Fund - Subordinate Debt for Stressed MSMEs’ and the credit product for which guarantee would be provided under the Scheme shall be named as ‘Credit Guarantee Scheme for Subordinate Debt (CGSSD).
To provide guarantee coverage for the CGSSD to provide Sub-Debt support in respect of restructuring of MSMEs. 90% guarantee coverage would come from scheme/ Trust and remaining 10% from the concerned promoter(s).
The Scheme would be applicable to all credit facilities sanctioned under CGSSD for a maximum period of 10 years from the guarantee availment date or March 31, 2021 whichever is earlier, or till an amount of Rs.20,000 crore of guarantee amount is approved.
Promoter(s) of the MSME unit will be given credit equal to 15 % of his/her stake (equity plus debt) or Rs 75 lakh whichever is lower.
The quantum of finance to an individual borrower in a specific cluster should be need based and to be assessed as per requirement of business.
Personal Loan: Term Loan to be provided to the promoters of Stressed MSME accounts.
2.50% over RBLR
The promoters are required to bring in 10% of the Sub Debt amount as margin money/Collateral.
The sub-debt facility so sanctioned by MLIs will have 2nd charge of the assets financed under existing facilities for the entire tenor of the sub-debt facility.
90% guarantee coverage would come from scheme/ Trust and remaining 10% from concerned promoter(s) on the credit extended by MLIs under the scheme. The guarantee cover would be uncapped, unconditional and irrevocable credit guarantee.
1.50% per annum on the guaranteed amount on outstanding basis. Guarantee fee may be borne by the borrowers as per the arrangements between the borrower and the MLIs.