Objective of the scheme
The MSME Atmanirbhar Loan Scheme is announced to support businesses amidst
unprecedented financial distress caused due to COVID-19. The loan will provide credit cushion
to businesses in meeting their operational liabilities and restart their operations after the
lockdown. This scheme which is now operational and known as Guaranteed Emergency
Credit Line with total amount of Rs 3.00 lakh crore to support business enterprises/MSMEs
(Micro, Small & Medium Enterprises) by way of easy working capital loan at cheaper rate of
interest.
Guaranteed Emergency Credit Line (GECL) Scheme –
GECL is the central government’s 100 percent credit guarantee scheme for MSMEs. Under this
scheme, National Credit Guarantee Trustee Company (NCGTC) offers 100% guarantee to
Member Lending Institutions (MLIs) against working capital term loan facility or additional
term loan facility for Small and Medium Business Enterprises.
Member Lending Institutions (MLIs) means all scheduled commercial banks, NBFCs & Financial Institutions
Eligible Enterprises and criteria under the scheme
The eligible units (eligibility criteria defined below) could be running as registered companies,
proprietorships, partnerships, trusts and limited liability partnerships (LLPs), or the MUDRA
borrowers (PMMY). It also states that a business dose not needs to be registered as MSMEs to
get the credit.
All MSMEs/business enterprises that have an annual turnover of up to Rs. 100 crore and have
outstanding credit of up to Rs. 25 crore as on 29.02.2020 will be eligible under the scheme. The
Scheme is offered only to existing customers of member lending institutions. The accounts
should be classified as regular, SMA-0 or SMA-1 and not as NPA or SMA-2 as on 29.02.2020.
Any existing loan such as vehicle loan taken by an entity will be taken into consideration for
calculating Rs. 25.00 crore out-standing, but vehicle loan taken by promoter or director in
personal capacity will not be covered.
Any New borrowers who received loan after the Feb 29 is not eligible under the scheme and they may avail loan under other schemes such as CGTMSE and NCGTC.
El Moratorium & Repayment Period
Under the scheme, there is a one year moratorium on the principle. Interest will accrue during
the moratorium period. The principle is to be repaid in 36 instalments once the moratorium
period is over. Therefore, total tenure of the loan is 4 years.
Pricing- Rate of Interest/other cost
Interest rate caped maximum at 9.25% (for banks and financial institutions) and @ 14.00% (for
NBFCs).
- NCGTC will not charge any fee for providing credit guarantee.
- No additional processing will be charged by lenders.
- Borrowers can avail benefits of other interest subvention schemes as per the eligibility.
- No pre-payment penalty will however be charged in case of early repayment.
No Security required from borrowers
100% guarantee coverage will be provided to the borrowers under the scheme by NCGTC
(National Credit Guarantee Trustee Company Limited). It will be a pre-approved sanction limit
of up to 20 percent of loan outstanding as on February 29 to eligible borrowers.
Eligible Loan Amount
A borrower could get credit up to Rs. 5.00 crore. GST registration will be mandatory for
borrower except for those registrations is not required.
A separate loan account will be opened for the borrower for extending additional credit under
GFCL. The tenor of loans will be four years from the date of disbursement.
It will be in the form of additional working capital term loan facility (in case of bank and
financial Institution) and additional term loan facility (in Case of NBFCs) in view of Covid-19
crisis as a special scheme.
Only balance-sheet loans and outstanding as on 29.02.2020 are covered under the
scheme.
This loan will be treated as separate account, not the top up to the existing loan.
Duration of the Scheme
The scheme would be applicable to all loans sanctioned under the GFCL facility during the
period from the date of announcement of the scheme to October 31, or till an amount of Rs.
3.00 lakh crore is sanctioned under the GFCL, whichever is earlier.
What is new definition of MSME?
While announcing the first tranche of the Rs. 20 Lakh crore Covid-19 financial packages,
Finance Minister Nirmala Sitharaman also announced a change in the definition of MSMEs.
As per the revised definition:
- An enterprise with an investment up to Rs. 1 crore & turnover up to Rs. 5 crores will be
classified as a ‘micro’ enterprise. - An enterprise with an investment up to Rs. 10 crore & turnover up to Rs. 50 crore will
be classified as a ‘small’ enterprise. - An enterprise with an investment up to Rs. 50 crore & turnover up to Rs. 250 crore will
be classified as a ‘medium’ enterprise.
Compiled by:-
CA Sunil Bhoruka &
CA Suresh Kr. Jaiswal
Email Id: – suvidha@suvidhaconsultants.com
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