Loans for MSMEs - Coronavirus Relief

Amidst the financial crisis being faced by the industries due to the ongoing pandemic, the Hon’ble Finance Minister addressed the media about the economic package that was introduced as a part of Aatma Nirbhar Bharat Abhiyaan. Industries, especially MSMEs were looking forward to a helping hand by the way of financial assistance from the Finance Ministry. Various schemes to provide loans for MSMEs have been unveiled in this package.

Emergency working capital facility of Rs. 3 lakh crores to MSME units

Term loan carrying concessional rates of interests amounting to 20% of the outstanding credit of the units as on 29th February 2020 to be extended to MSMEs, without the need of any guarantee or collateral.
Units with outstanding credit up to Rs. 25 crores and turnover up to Rs. 100 crores shall be eligible, provided their account status is standard.

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MSME Loans - Coronavirus

Subordinate debt amounting to Rs. 20,000 crores extended to MSMEs that are NPAs or stressed

FM announced a provision of Rs. 20,000 crores on account of subordinate debt for MSMEs that are either NPA or stressed. Further, Rs. 4,000 crores to be provided to Credit Guarantee Trust for Micro and Small Enterprises.
Subordinate debt to be provided by banks to the promoters of MSMEs of an amount equaling 15% of their present stake in the unit, subject to an upper cap of Rs. 75 lakhs.

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Loan for NPA Companies

MSME Funds of Funds to infuse equity corpus of Rs. 50,000 crores

Government to introduce a corpus of Rs. 10,000 crores into a Funds to Funds to provide equity funding to MSMEs. The fund will run with a leverage ratio of 1:4.

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Equity for MSMEs

Definition of MSME revised

Investment limit that defines enterprises as MSMEs to be raised to bring in more MSMEs. Further, turnover criteria also to be added to the definition.

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Revised MSME Definition - 2020

Residual measures for MSMEs

MSME receivables and CSPs due from the government to be released within 45 days.

Global tender requirement was done away with for Government tenders up to Rs. 200 crores

General Financial Rules to be amended to waive off the requirement of global tenders in case of procurement of supplies up to Rs. 200 crores.

EPF support to continue for business covered under the existing scheme of PMGKP

Government to continue its contributions to PF @ 12% of salary on part of employees and the employer for eligible units for the months of June, July and August 2020.

Reduction in EPF contribution rate

Liability of PF contribution reduced to 10% from the current 12% for both the employer and well as the employees for the months of June, July and August 2020.

Special Liquidity Scheme for NBFCS, HFCs and MFIs amounting to Rs. 30,000 crores

Special Liquidity Scheme to be launched under the initiative of Government in which liquidity will be provided by the central bank i.e. RBI. Investments to be backed up by the guarantee of the Indian Government.

Partial Credit Guarantee Scheme for NBFs, HFCs, and MFIs for Rs. 45,000 crores

The existing scheme will take the borrowings of lower-rated NBFCs, HFCs, and MFIs into its ambit and the government will extend 20% first loss sovereign guarantee to the Public Sector Banks.

Liquidity Injection of Rs. 90,000 crores for DISCOMs

Power Finance Corporation and Rural Electrification Corporate to provide financial assistance in two installments by infusing liquidity in DISCOMs for up to Rs. 90,000 crores to enable them to repay their outstanding dues to power generation and transmission companies.
Central Public Sector Generation Companies to provide rebates to DISCOMs on the condition that they pass on the relief to the final consumers.

Contractors get 6 months extension for completing contractual obligations

All the central agencies (such as Railways, CPWD, etc.) are directed to provide an extended time limit of 6 months to complete the contractual obligations assigned to them.

Relief to Real Estate Developers

The time limit for registration of real estate projects and completion of registered real estate projects extended by 6 months. States have been given autonomy to further extend the time limit by 3 months.

Tax relief for businesses

Income tax refunds due to charitable trusts and other non-corporate businesses and professions (incorporated as proprietorships, partnerships, LLP, cooperatives, etc.) to be issued at the earliest.

Tax measures eased

Rates of TDS and for all payments made to residents except salary payments, and rates of TCS reduced by the extend of 25% prospectively.
For the Assessment Year 20220-21, the due date to file income tax returns for all taxpayers has been extended to 30^thNovember 2020. Further, the due date for tax audit has also been extended to 31^st October 2020.
The last date to make payments without attracting any additional amount under the “Vivad se Vishwas” scheme extended to 31^stDecember 2020.

Full Presentation

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