April 23, 2020

SIDBI schemes for special liquidity support for MSMEs

By:

Invest India

In wake of the COVID-19 pandemic, SIDBI, continuing its responsiveness, has launched special schemes for supporting MSMEs through banks, NBFCs and MFIs. This scheme is supported by the special liquidity facility of INR 15,000 Cr provided by the Reserve Bank of India to SIDBI, to support MSME sector and meet sectoral credit needs.

These schemes cover all eligible entities having investment grade ratings irrespective of the size of the organization to ensure wider coverage.

Key Features and Requisites

	Scheme for liquidity support to MSMEs through NBFCs	Scheme for liquidity support to MSMEs through MFIs	Special refinance scheme for MSE to provide liquidity support
Objective	To provide liquidity support to MSMEs impacted due to COVID-19, through NBFCs including Fintech NBFCs. The scheme would provide resource support to NBFCs by way of term loans to ensure operational continuity and promote onward lending to MSME sector	To provide liquidity support to MSMEs impacted due to COVID-19, through MFIs. The scheme would provide resource support to MFIs by way of term loans to ensure operational continuity and promote onward lending to MSME sector	To support the MSEs by facilitating flow of credit to this sector by ensuring sufficient liquidity in the hand of intermediary Financial Institutions
Type and Eligibility	Registered with RBI as Investment and Credit Company (ICC) In business for 3 years Have Minimum Net Owned Funds of INR 20 Crore and Minimum Asset Size of INR 50 Crore Have an external rating of 'BBB-' or superior (as on March 31, 2020) Be in compliance with applicable regulatory requirements Promoter/Entity should not be in any RBI blacklist or defaulters list Capital Adequacy ratio to be above RBI requirements, at all times in past 24 months	ln operations for 3 years Registered as Society, Trust, Company/Section 8 Company, NBFC-MFls, Co-operative Society and MACS Have an external rating of 'BBB-' or superior (as on March 31, 2020) and minimum MFI grading of ''MfRS'' Promoter/Entity should not be in RBI blacklist or defaulters Iist Capital Adequacy ratio not below RBI requirements, any time in past 24 months (applicable for NBFC-MFls) Comply with applicable regulatory guidelines.	Scheduled commercial banks (Public, Private, Foreign) and Small Finance Banks (SFBs). SIDBI's assistance will be available under the scheme to those scheduled banks having sizeable outstanding portfolios to MSEs/micro-credit and sound financials with following eligibility criteria: For Banks (other than SFBs): In operation for a period of 3 years Earned profit in at least 2 out of last 3 years Following based on last audited balance sheets viz. Net worth of not less than INR 100 Cr Capital to risk weighted assets of not less than 9% Level of Net NPAs not exceeding 10% For SFBs The SFB/previous entity prior to conversion to SFB (taken together) should have earned profits during at least 2 out the last 3 years Comply with the following: Net worth ≥ INR 100 Cr CRAR ≥ 15% Gross NPA ≤ 7%
Eligibility Activity/Beneficiaries	Facilities extended to MSMEs for bonafide business purposes	Facilities extended to microfinance borrowers/clients by the MFls	Eligible Activities: As defined in section 2(h) of the SIDBI Act Units satisfying definition of micros and small enterprises as per Mirco, Small and Medium Enterprises Development (MSMED) Act, 2006
Tenor	The loan shall be repaid in bullet instalment after 90 days from date of drawl or such date as may be decided by the bank	The loan shall be repaid in bullet instalment after 90 days from date of drawl or such date as may be decided by the bank	Generally, 90 days. In deserving cases could be extended longer (to be reset every 90 days, linked to prevailing repo rate)
Security	Need based security as per bank's extant norms	Need based security as per bank's extant norms	As per the General Agreement
Processing Fee	0.10% of sanctioned amount subject to a maximum of INR 5 Lakh along with applicable GST	0.10% of sanctioned amount subject to a maximum of INR 5 Lakh along with applicable GST