Last updated: April 29th, 2020 3:15 PM

SIDBI Schemes for Special Liquidity Support for MSME

To support COVID-19 hit businesses, Reserve Bank of India (RBI) granted a Special Liquidity Facility (SLF) of Rs.15000 crore to Small Industries Development Bank of India (SIDBI) to enable it to provide liquidity support to MSME and meet sectoral credit needs. Accordingly, The SIDBI has launched the special liquidity schemes for support to MSME sectors impacted by the COVID-19 outbreak. The special scheme would provide financial support to Scheduled Commercial Bank, Small Finance Banks (SFB), Non-Banking Financial Companies (NBFC) and Microfinance Institutions (MFI) by way of term loans to ensure operational continuity and promote onward lending to Micro, Small and Medium Enterprises.

Eligible Entities

The SIDBI Special Liquidity schemes will cover all eligible entities having investment-grade ratings irrespective of the size of the organizations.

Special Refinance Scheme for MSE to Provide Liquidity Support

The eligibility parameters and other norms of the Special Refinance Scheme for MSME to Provide Liquidity Support are as follows:

Objective of the scheme

To support the MSE by facilitating the flow of credit to this sector by ensuring sufficient liquidity in the hand of intermediary Financial Institutions

Eligibility Criteria

Scheduled commercial banks (Public, Private, Foreign) and Small Finance Banks (SFBs) are eligible for this scheme. 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):

The bank must be in operation for three years and should have earned a profit in at least 2 out of the last three financial years. According to the audited balance sheet, the bank should comply with the following norms:

• The bank should have a Net worth of not less than Rs.100 Cr
• The Capital to risk-weighted assets of the bank should not be less than 9%
• Level of Net Non-performing asset (NPA)s of the bank should not be exceeding 10% to become eligible for this scheme

For Small Finance Banks

The SFB and the previous entity before conversion to SFB (taken together) should have earned profits during at least two out of the last three years. The SFB need to comply with the following:

• The SFB should have a Net worth of not less than Rs.100 Cr
• Capital to Risk (Weighted) Assets Ratio (CRAR) of the SFB should be 15% or above
• Gross non-performing assets (NPAs) need to be equal to 7% or higher than this

Eligible Activities

The eligible activities of the bank as defined in section 2(h) of the Small Industries Development Bank of India Act

Beneficiaries

Any organization satisfying the definition of micros and small enterprises as per Micro, Small and Medium Enterprises Development (MSMED) Act 2006, is eligible for this scheme.

Tenor Details

The special liquidity scheme loan needs to be repaid after 90 days from the date of drawl and in deserving cases could be extended longer. The details to be reset every 90 days, linked to the prevailing repo rate

Security Details

The security details for this loan is based on the General Agreement.

Application Procedure

Scanned copies of the duly signed application form, certificates, and documents need to be sent to email id ifvrefinance@sidbi.in for availing the financial aid from SIDBI. The application form for the Special Refinance Scheme for MSE to Provide Liquidity Support is as follows:

Scheme for Special Liquidity Support for MSME through NBFCs

The eligibility parameters and other norms of the Scheme for Special Liquidity Support for MSME through NBFCs are as follows:

The objective of the Scheme

The objective of the scheme is to provide liquidity support to MSMEs impacted due to Covid-19 through Non-Banking Financial Companies, including fintech NBFCs. The special scheme would provide financial support to NBFC by way of term loans to ensure operational continuity and advance onward lending to MSME (Micro, Small and Medium Enterprises).

Eligibility Parameters

• The NBFC needs to be registered with RBI as Investment and Credit Company (ICC) to become eligible for this company
• If an NBFC is in business for three years, such a firm can provide term loans through a special liquidity scheme.
• The Non-Banking Financial Companies should have Minimum Net Owned Funds of Rs.20 Crore and Minimum Asset Size of Rs.50 Crore to become eligible for the scheme
• The financial company need to have an external rating of BBB or superior (as on March 31, 2020)
• NBFC should comply with applicable regulatory requirements
• To become eligible for this scheme, the promoter or entity should not be in any RBI blacklist or defaulters list
• The financial company should have the Capital Adequacy ratio above RBI requirements, at all times in the past 24 months

Beneficiaries

These special liquidity scheme facilities extended to MSMEs for bonafide business purposes.

Tenor Details

The special liquidity scheme loan need to be repaid in bullet installment after 90 days from date of drawl or such date as may be decided by the designated bank

Security

The scheme provides need-based security as per bank's extant norms

Processing Fee

The MSME is required to pay 0.10% of the sanctioned amount subject to a maximum of Rs.5 Lakh along with applicable GST.

Documents Required

• Details of promoters/directors of the company
• Certified copy of the passport of the Promoters / Directors and other authorized signatories of the company.
• Details of associate concerns
• Memorandum and Articles of Association.
• Certificate of Registration with RBI
• Annual Reports for the last three years.
• Declaration regarding banking facilities
• Latest Asset Liability Maturity Profile filed with RBI
• Latest certified returns filed with RBI
• Latest Rating rationale
• In case personal guarantees are offered, the latest CA certified net worth statements of the guarantors.
• Undertaking duly signed by each director providing his/her consent concerning accessing the CIBIL's database, for accessing the credit reports

Application Procedure

Scanned copies of the duly signed application form, certificates, and documents need to be sent to email id ifv_nbfc@sidbi.in. The application form format is as follows:

Scheme for Special Liquidity Support for MSME through MFI

The eligibility parameters and other norms of the Scheme for Special Liquidity Support for MSME through MFIs are as follows:

Objective of the Scheme

The objective of the scheme is to provide liquidity support to MSMEs impacted due to Covid-19 through Microfinance Institutions (MFI). The special scheme would provide financial support to MFI by way of term loans to ensure operational continuity and promote onward lending to Micro, Small and Medium Enterprises.

Eligibility Parameters

• If an MFI is in business for three years, such a bank can provide term loans through a special liquidity scheme.
• The MFI Registered as Society, Trust, Section 8 Company, NBFC-MFls, Co-operative Society and MACS are eligible for the scheme
• The financial institution needs to have an external rating of BBB or superior (as on March 31, 2020) and minimum MFI grading of MFRS
• To become eligible for this scheme, the promoter or entity should not be in any RBI blacklist or defaulters list
• Capital Adequacy ratio should not be below RBI requirements, any time in past 24 months (it is applicable for NBFC-MFls)
• MFI should comply with applicable regulatory requirements

Beneficiaries

The beneficiaries of this scheme are microfinance borrowers and clients by the Microfinance Institutions

Tenor Details

The loan needs to be repaid in bullet installment after 90 days from date of drawl or such date as may be decided by the financial institution

Security

The scheme provides need-based security as per bank's extant norms

Processing Fee

The MSME is required to pay 0.10% of the sanctioned loan amount subject to a maximum of Rs.5 Lakh along with applicable GST.

Documents Required

• Registration Certificates / Renewals / Certificate of Incorporation / Certificate of commencement of business
• Memorandum & Articles of Association/ Bye-laws.
• Brief Profile of Board of Directors and chief functionary Shareholding Pattern
• Name, address and contact numbers of present and past funding agencies
• Audited/provisional accounts and balance-sheet of the organization for the last three years
• KYC document of Company & Directors
• Credit facilities availed from the other lenders
• Operational Highlights
• Details of Portfolio at Risk
• Details of Geographical spread
• Details of Associate concerns and its financial performance
• Expected outreach and impact of proposed liquidity support

Application Procedure

Scanned copies of the duly signed application form, certificates, and documents need to be sent to ifv_nbfc@sidbi.in to avail the financial assistance. The application form for Scheme for Special Liquidity Support for MSME through MFI is as follows: