Interest Subvention Scheme for MSMEs: Get Short Term Agriculture Loans

Central Government Launched Interest Subvention Scheme for MSMEs to Get Short Term Agriculture Loans – Micro, Small and Medium Enterprises (MSME) industries play an important role in making the national economy of any country strong and stable. In this direction, the Indian Ministry of Micro, Small and Medium Enterprises (MSME) has started the Interest Subvention Scheme for MSMEs for scheduled commercial banks on 2nd November 2018. Today, through this article, we will share with you all the necessary information related to the Interest Subvention Scheme, such as: – Purpose, Benefits, Features, Eligibility Criteria, Application Process etc. If you are also willing to get all the important information related to this scheme, then definitely stay with our article till the end. [Also Read- (Registration) PM Cares for Children Scheme: PM Cares for Children Online Application Form]

Interest Subvention Scheme

Interest Subvention Scheme has been started by the Ministry of Micro, Small and Medium Enterprises (MSME), under which interest relief is provided to micro, small and medium enterprises by scheduled commercial banks on their outstanding fresh or incremental term loans or working capital. The eligible MSMEs under this scheme are provided an interest relief of two per cent per annum on their outstanding balance during the period of their validity. It was decided to pass the Interest Subvention Scheme started by the Ministry of MSME (MoMSME) in the financial years of 2018-19 and 2019-20, but due to the era of Corona epidemic, this scheme has been exceeded till the financial year 2020-21 i.e. till 31 March 2021. [Also Read- (PMJJBY) Pradhan Mantri Jeevan Jyoti Bima Yojana 2023: Online Application, Application Form]

Interest Subvention Scheme

Overview of Interest Subvention Scheme 

Scheme NameInterest Subvention Scheme 
Launched ByMinistry of Micro, Small and Medium Enterprises (MSME)
Year2023
BeneficiariesMicro, Small and Medium Enterprises
Application ProcedureOnline/Offline
ObjectiveTo encourage manufacturing and service enterprises to increase productivity and onboarding MSMEs to the GST platform
BenefitsInterest relief at 2% on outstanding loan/balance of MSMEs
CategoryCentral Government Schemes
Official Website…………….

Objective of Interest Subvention Scheme

The main objective of the Interest Subvention Scheme started by the Central Government is to encourage service and manufacturing enterprises to increase productivity. Along with this, the second objective of this scheme is to provide incentives for onboarding MSMEs to the GST platform to further strengthen the economy of the country, which will reduce the cost of credit to MSMEs. It was decided by the Ministry of MSME (MoMSME) to implement this scheme in two financial years FY 2018 -19 and FY 2019-20 but due to the Corona pandemic it has been decided to make it operational in FY 2020-21. Under this scheme, interest subvention of 2% is provided to public sector banks, regional rural banks (RRBs) and co-operative banks in respect of short-term production loans up to a maximum of Rs.100 lakh. [Also Read- (PMJJBY) Pradhan Mantri Jeevan Jyoti Bima Yojana 2023: Online Application, Application Form]

Benefits and Features of Interest Subvention Scheme

  • The Interest Subvention Scheme has been started by the Central Government, which is operated by the Ministry of Micro, Small and Medium Enterprises (MSME).
  • Through this scheme, service and manufacturing enterprises will be encouraged to increase productivity.
  • Along with this, incentives will also be provided to MSMEs to onboard the GST platform under this scheme.
  • Through this scheme, the cost of credit of MSMEs will be reduced, which will further strengthen India’s economy.
  • This scheme was planned to be implemented by the Ministry of Micro, Small and Medium Enterprises in the financial years 2018-19 and 2019-20, which has been extended till the financial year 2020-21 due to the covid-19 epidemic.
  • Through this scheme, interest relief is provided to micro, small and medium enterprises by scheduled commercial banks on their outstanding fresh or incremental term loans or working capital.
  • Under this scheme launched by the Government of India, interest subvention of 2% per annum has been provided to public sector banks, regional rural banks (RRBs) and co-operative banks in respect of short-term production loans up to Rs.100 lakh.
  • Simultaneously, the interest relief will be calculated at two percentage points per annum (2% p.a.), on outstanding balance from time to time from the date of disbursal / drawal or the date of notification of this scheme, whichever is later, on the incremental or fresh amount of working capital sanctioned or incremental or new term loan disbursed by eligible institutions.
  • The interest rates charged to MSMEs shall conform to Code of Ethics and Fair Practices Code as published by respective institutions (as per extant RBI guidelines) and linked to the respective internal / external rating of the MSME as per applicable interest rate guidelines of the institution.
  • The loan accounts on the date of filing claim should not have been declared as NPA as per extant guidelines in force. No interest subvention shall be admissible for any period during which the account remains NPA.

Eligibility Criteria for Interest Subvention Scheme

  • Under this scheme launched by the central government, it will be mandatory for micro, small and medium enterprises to have a valid Udyog Aadhaar Number (UAN).
  • It will also be mandatory for the micro, small and medium enterprises to have a valid GSTN number.
  • Such micro, small and medium enterprises which are already availing the benefit of interest subvention under any other scheme of the state or central government, will not be considered eligible for this scheme.
  • Along with this, such micro, small and medium enterprises who are getting the benefit of interest subvention for pre-shipment or post-shipment credit under the Department of Commerce, will also be considered ineligible under the Interest Subvention Scheme.
  • In order to ensure maximum coverage and outreach under this scheme of the Central Government, all working capital or term loans will be eligible for coverage to the extent of Rs 100 lakh only during the term of the scheme.

Implementing Agency of Interest Subvention Scheme

Small Industries Development Bank of India is an implementing agency for the Interest Subvention Scheme launched by the Ministry of Micro, Small and Medium Enterprises (MSME), accurate data is required to be furnished by all lending institutions. Additionally they should also monitor the interest subvention scheme, submit their half-yearly claims to SIDBI in the format prescribed by the interest subvention scheme guidelines to the nodal office of eligible institutions for submitting claims of the scheme. 

Additionally, MSMEs can apply directly to the eligible lending institutions for availing interest subvention on outstanding working capital or term loan, interest subvention is issued by the statutory auditors of the eligible lending institutions on the basis of duly certified claim. Will go. Interest subvention amount will be released subject to availability of funds from SIDBI Government, the final authority for all interest subvention matters is the Ministry of MSME, their decision hereunder will be binding and final. Along with this, receipt of funds is considered as a utilization certificate of funds by the eligible lending institutions.

Applicability of Interest Subsidy Scheme

Interest subvention up to Rs 100 lakh can be claimed by an MSME on the total amount of its working capital or term loan sanctioned by an eligible institution. Subsidy is interest subvention under the Interest Subvention Scheme on the outstanding amount of loan taken by MSMEs. Under this, interest subvention can also be claimed by MSMEs on the outstanding balance of incremental or fresh amount of working capital sanctioned or disbursed to them by more than one scheduled commercial bank. May go. 

The scheme has been expanded by the government to cover co-operative banks, which have become eligible lending institutions under the scheme since the outbreak of COVID-19. Additionally, fresh or incremental term loans extended by co-operative and scheduled commercial banks from March 3, 2020 to March 31, 2021 were eligible for coverage under the working capital scheme.

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