MSMEs seek better implementation of interest subvention scheme

 

Funds-starved MSMEs say government sops such as the 2 per cent interest subvention (for MSMEs) has continued to remain on paper even after 17 months of launch.Recalling the Prime Minister’s announcement (of the 2 per cent interest subvention scheme for MSMEs) in early November 2018, followed by a circular by the RBI to heads of scheduled commercial banks in February 2019, the President of the Coimbatore Compressor Industries Association (COCIA), M Raveendran, explained that all MSME units with valid GST and Udhyog Aadhaar registrations were eligible for coverage under the scheme on incremental term loans or fresh term loan availed from scheduled commercial banks.

 

This subvention was applicable for 17 months from November 2, 2018 to March 31, 2020, for a maximum loan amount of ?1 crore.

However, MSME exporters availing interest subvention for pre-shipment or post shipment credit would not be eligible for assistance under Interest Subvention Scheme for Incremental Credit to MSMEs, 2018. Similarly, those MSMEs availing interest subvention under any other State/Central government schemes would also be ineligible to avail the benefit, the COCIA president explained.

Nodal agency

Small Industries Development Bank of India (SIDBI) was identified as the nodal implementation agency for the scheme.

The lending institutions had to submit their half yearly claims to SIDBI, with respect to the loans disbursed and interest claimed. And to avail the benefit, the MSMEs had to submit a notarised affidavit to their respective banks.

“It is the duty of the concerned bank to claim this interest subvention through SIDBI once every six months and disburse the proceeds to the eligible MSMEs. By this time, the banks should have submitted three half-yearly claims to SIDBI, but many bankers have not even initiated the process. The MSMEs have been deprived of the benefit,” said Raveendran.

COCIA has now appealed to Union Finance Minister Nirmala Sitharaman to remind bankers to initiate action and submit the claim to SIDBI . The association has also requested the assigning of a separate official at the branch level to look into the scheme work.