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Credit Guarantee Scheme For Subordinate Debt (CGSSD)

July 26, 2020 BizNiti

Introduction of Sub-ordinate Debt Scheme under Atmanirbhar Bharat Abhiyan.

As announced by government of India under Atmanirbhar Bharat Abhiyan, Scheme for providing Sub-ordinate debts by Nationalised banks to Stressed/ NPA MSME ‘s is announced recently.

Initial Destressed Assets Fund of Rs 4000 crores is created by GOI. Under the said fund CREDIT GUARANTEE SCHEME FOR SUBORDINATE DEBT (CGSSD) is launched on 24th June 2020

Scheme is providing financial support to promoters of Stressed/ NPA MSME ‘s, who are borrowers of Nationalised banks proportionate to promoter’s equity/ debt contribution to business. Bank will extend the loan maximum upto a limit of 15% or Rs 75 lakhs of promoter’s contribution, whichever is less. The said financial support will be in the form of Loan to  promoter with a condition to reinvest entire amount of said loan into the said MSME as equity/ debt.  Said loan will carry normal interest rate and for a maximum tenure of 10 years. Moratorium for repayment of principal could be granted by lending bank upto 7 years. The said loan will not have any charges for pre-payment or early repayment.

The entire detail of the scheme are available in the Guidelines issued by MSME ministry in this regard.

Read guidelines – https://champions.gov.in/Docs/CGSSD.pdf

Read Scheme FAQ – http://dcmsme.gov.in/FINAL-FAQs%20on%20Sub-Debt-Scheme-23-6-2020.pdf