1. Collateral free credit: Under CGTMSE (Credit Guarantee Funds Trust for Micro and Small Enterprises) scheme, MSME’s can avail maximum collateral free credit (Fund based / non fund based – LC, BG etc) upto of Rs. 200 Lacss from Eligible Institutions. Maximum Guarantee Cover is as under
|Category||Maximum extent of Guarantee where credit facility is|
|Upto 5 lakh||Above 5 lakh upto 50 lakh||Above 50 lakh upto 200 lakh|
|Micro Enterprises||85% of the amount in default subject to a maximum of 4.25 lakh||75% of the amount in default subject to a maximum of 37.50 lakh||75% of the amount in default subject to a maximum of 150 lakh|
|Women entrepreneurs/ Units located in North East Region (incl. Sikkim) (other than credit facility upto 5 lakh to micro enterprises)||80% of the amount in default subject to a maximum of 40 lakh|
|All other category of borrowers||75% of the amount in default subject to a maximum of 37.50 lakh|
|MSE Retail Trade
Credit : 10 Lakh to 1 Cr
|50% of the amount in default subject to a maximum of 50 lakh|
Annual Guarantee Fee (AGF): The fee charged is on the Guarantee amount for the 1st year and on the outstanding amount in subsequent years.
|Credit Facility||Annual Guarantee Fee (AGF)|
|Women, Micro Enterprises and Units covered in North East Region||Others|
|Up to 5 Lakhs||1.00 + Risk Premium|
|Above 5 Lakhs and up to 50 Lakhs||1.35 + Risk Premium||1.50 + Risk Premium|
|Above 50 Lakhs and up to 200 Lakh||1.80 + Risk Premium|
2. Protection against delay in payment: It has been clearly spelled in the act that the buyer has to make payment to MSME seller for the goods/services within the time period mentioned in the written agreement which, in no case, shall exceed 45 days from date of acceptance or date of deemed acceptance. If the buyer fails to pay within the prescribed time limit, then, notwithstanding anything contained in any agreement between buyer and seller or in any law for the time being in force, he has to pay compound interest with monthly rest at three time of bank rate on the due amount to the seller (Section 16 of the Act).
3. Trade Receivables Discounting System (TReDS): TReDS is an electronic platform for facilitating the financing / discounting of trade receivables of Micro, Small and Medium Enterprises (MSMEs) through multiple financiers. These receivables can be due from corporates and other buyers, including Government Departments and Public Sector Undertakings (PSUs). It enables market making and discovery of competitive rates for invoice/exchange bills of MSME sellers through an auction mechanism to ensure the prompt realisation of trade receivables at competitive market rates. The TReDS could deal with both receivables factoring as well as reverse factoring.
4. Interest Equalization Scheme: Under the “Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit”, the Interest Equalisation @ 5% per annum is available to all MSME exporters across all their merchandise exports. This scheme have been extended till 31/03/2021.
5. Credit Facilitation Through Bank: NSIC has entered into a Memorandum of Understanding with various Nationalized and Private Sector Banks. Through association with these banks, NSIC arranges for credit support (fund or non-fund based limits) from banks for the MSMEs.
The interest rate and the security norms depends upon banks to banks. The scheme also provides handholding facility to the entrepreneurs and facilitate documentation.
6. Technology Upgradation support: Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation, provides an upfront capital subsidy for upgrading technology for new or existing Micro, Small and Medium Enterprises (MSMEs). The scheme provides upfront capital subsidy of 15 per cent (on institutional finance of upto Rs 1 crore availed by them) to MSMEs, including tiny, khadi, village and coir industrial units, for induction of well-established and improved technologies in specified sub-sectors/products approved under the scheme. This scheme currently encompasses 51 sub-sectors/products. Replacement of the current equipment with the same ones or purchasing of second-hand equipment shall not be entertained under this scheme. The Scheme is a demand driven one without any upper limit on overall annual spending on the subsidy disbursal.
7. Reimbursement of certification fees for acquiring ISO standards: The scheme envisages reimbursement of charges incurred for acquisition of ISO-9000/ISO-14001/HACCP certification to the extent of 75% of expenditure, subject to a maximum of Rs.75,000/- in each case. It includes 75% of the certification expenses up to a maximum of Rs.75,000/- (Rupees seventy five thousand only) to each unit as one-time reimbursement only to those MSEs which have acquired Quality Management Systems (QMS)/ISO 9001 and /or Environment Management Systems (EMS)/ ISO14001 and / or Food Safety Systems (HACCP) Certification.
8. Credit rating support: Under this scheme (as per the turnover of the MSE) a percent of Rating Agency charges are reimbursed by Ministry of SSI through NSIC. The fee to be paid to the rating agencies shall be based on the turnover of the MSEs which has been categorized into three slabs. The slabs of the Turnover and the share of Ministry of MSME towards the fee charged by the Rating Agency have been indicated in the table given below :
|Turnover||Fee to be reimbursed by Ministry of MSME|
|Upto 50 Lacs||75% of the fee or Rs. 25,000 (whichever is less)|
|Above Rs. 50 to 200 lacs||75% of the fee or INR30,000 (whichever is less)|
|More than Rs. 200 lacs||75% of the fee or INR40,000 (whichever is less)|
The balance amount towards the fee shall be borne by the MSEs.
9. Energy Conservation support: Under this scheme, enterprises having MSME Registration can avail a concession in electricity bills by making an application to Electricity board along with MSME Registration Certificate.
10. Priority Sector Lending (PSL): Banks, by virtue of the directions issued by the Reserve Bank of India, have certain earmarked funds that have to mandatorily be given to MSMEs (at present 7.5 per cent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBSE)). In addition to this, to ensure that MSMEs do not remain small and medium units merely to remain eligible for priority sector status, the MSME units shall continue to enjoy the priority sector lending status up to three years after they grow out of the MSME category concerned.
11. Marketing Support/Assistance to MSMEs (Bar Code): Under this scheme, the Ministry of MSME will reimburse 75% of the one-time registration fees for bar coding and 75% of the annual renewal fees incurred for the first three years.
12. Raw Material Assistance Scheme: Under this scheme, Manufacturing MSME having Udyog Aadhaar Memorandum (UAM) gets finance assistance for procurement of Raw Material ((both indigenous & imported) upto 90 Days. Main aims of this scheme is to make availability of Raw material on credit and enable MSMEs to execute the orders in hands.
13. Single Point Registration Scheme: The Government is the single largest buyer of a variety of goods. With a view to increase the share of purchases from the small-scale sector, the Government Stores Purchase Programme was launched in 1955-56. NSIC registers Micro & small Enterprises (MSEs) under Single Point Registration scheme (SPRS) for participation in Government Purchases. Some of Benefits of this schemes are,
14. All new industrial units in public IT parks are exempted from payment of stamp duty and registration fees
Disclaimer: The information in this article is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. CA Saurabh Anokhchand Jain, accepts no responsibility for loss arising from any action taken or not taken by anyone using this article. Readers of this article are advised to seek their own professional advice before taking any course of action or decision, for which they are entirely responsible, based on the contents of this article. We neither accept nor assume any responsibility or liability to any reader of this document in respect of the information contained within it or for any decision readers may take or decide not to or fail to take.