Subordinate debt scheme for stressed MSMEs extended till March 2023

Initially the scheme was up to March 31, 2021. The government later extended this scheme up to March 31, 2022.

The ‘Distressed Assets Fund- – Subordinate Debt for Stressed MSMEs’ was created on May 13, 2020, under the ‘Aatma Nirbhar Bharat’ economic package.

‘Credit Guarantee Scheme for Subordinate Debt’ was approved by the Government on June 1, 2020 and the scheme was launched on June 24, 2020 to provide credit facility through lending institutions to the promoters of stressed MSMEs — SMA-2 and NPA accounts — who are eligible for restructuring as per RBI guidelines on the books of the Lending institutions.

“On the basis of the requests received from the stakeholders of the scheme, the government has decided to further extend this scheme till March 31, 2023,” said a statement from the Ministry of Micro, Small & Medium Enterprises.

Further, as the Budget Session of Parliament resumed on Monday, in a written reply to a question in Rajya Sabha, the Minister of State for Micro Small and Medium Enterprises (MSME), Bhanu Pratap Singh Verma said that about 1,623 MSMEs closed during the period of April, 2020 to October, 2021.

Outlining the steps taken by the government amid the pandemic to support small businesses, the minister said that ₹20,000 crore subordinate debt for MSMEs, ₹3 lakh crores Emergency Credit Line Guarantee Scheme (ECLGS) for businesses, including MSMEs, which now been increased to ₹5 lakh crore among other schemes.