Last updated: July 8th, 2020 1:07 AM

Timely Working Capital Assistance to Revitalise Industries in Times Of Corona Crisis (TWARIT Scheme)

The unprecedented situation caused by Corona Virus and the consequent lockdown has critically impacted the Ministry of Micro, Small and Medium Enterprises (MSME) sector. Small Industries Development Bank of India (SIDBI) has introduced the Timely Working Capital Assistance to Revitalise Industries in Times of Corona Crisis (TWARIT) Scheme for supporting the MSMEs to continue functioning during this current situation. As part of this scheme, the SIDBI seeks to provide much-needed relief to the MSME sector by providing 20% of the total outstanding loans up to Rs 25 crore. The present article briefs the details of SIDBI’s TWARIT Scheme in detail.

Objective of TWARIT Scheme

As mentioned above, the TWARIT Scheme is a specific response to the unprecedented situation caused by the COVID-19 pandemic. The objective of the Timely Working Capital Assistance to Revitalise Industries in Times of Corona Crisis Scheme is to provide needed relief to MSME units whose operations are impacted by COVID 19.

Eligibility Criteria for TWARIT Scheme

The eligibility criteria to obtain the loan under the TWARIT Scheme are as follows:

• To avail the benefit of the TWARIT scheme, the MSME must be GST registered in all cases and this condition is not applicable for entities that are not required to obtain GST registration.
• The entity’s turnover for the financial year 2019-2020 should be Rs.25 crore to avail of the benefit.
• To be eligible under the Scheme, all existing borrower accounts including under Credit Delivery Arrangement with combined outstanding credit facilities of the unit should be Rs.25 crore as on 29.2.2020
• The TWARIT Scheme is valid for existing customers on the books of the Bank.
• For avail the TWARIT loan, borrower accounts should be less than or equal to 60 days past due as on 29th February 2020.
• Under the TWARIT scheme, an ‘opt-out’ option will be provided to the eligible entity to enable them to choose whether they wish to opt-out of the TWARIT facility.

Note: All borrowers which have not been classified as Special Mention Accounts (SMA 2) or Search Results Non-Performing Asset (NPA) by any of the Member Lending Institutions (MLIs) as on 29th February 2020 will be eligible for the Scheme

Eligible Enterprises

The MSMEs or Business Enterprises which are constituted in the form of following enterprises can avail the benefits of the Timely Working Capital Assistance to Revitalise Industries in Times of Corona Crisis (TWARIT Scheme)

• Proprietorships
• Partnerships
• Registered Companies
• Trusts and Limited Liability Partnerships (LLPs)

The Benefit of TWARIT Scheme

The benefit of the SIDBI’s TWARIT Scheme is as follows:

• Under the TWARIT Scheme, the borrower will get a loan repayment facility of 4 years including a moratorium of up to 1 year.
• The borrowers need not pay any penalty for the prepayment TWARIT scheme
• To obtain the loan under this SIDBI’s Scheme, the MSME units need not pay any amount as promoter’s contribution.
• There is no processing fee for obtaining the TWARIT scheme loan

TWARIT Scheme Quantum of Assistance

Quantum of Assistance provided under the TWARIT Scheme is explained in detail below            :

• As part of the TWARIT Scheme, all eligible entities will get 20% of total outstanding loans with SIDBI up to Rs.25 crore as on February 29, 2020, with cap exposure of Rs.5 crore or as modified by Government of India / National Credit Guarantee Trustee Company (NCGTC)
• The total outstanding amount comprises of on-balance sheet exposure such as the outstanding amount of Working Capital limit, term loans and Working Capital Term Loan (WCTL)
• Off-balance sheet and non-fund-based exposures are not included under this new Scheme.

Rate of Interest

The SIDBI has fixed a uniform interest rate for the loan provided under the Timely Working Capital Assistance to Revitalise Industries in Times of Corona Crisis Scheme. The interest rate for the loan is 8.25%   per annum with an annual reset.

TWARIT Scheme Tenure Details

The SIDBI TWARIT Scheme loan provides a tenure of 4 years that is a moratorium of 1 year and the principal amount need to be repaid within 3 years.

TWARIT Scheme Security Details

• SIDBI provides an extension of charges on the Primary Security or Collateral Security under the TWARIT scheme
• The additional Working Capital Term Loan (WCTL) facility granted under TWARIT shall rank the second charge with the existing credit facilities in terms of cash flows and security, with a charge on the assets financed under the TWARIT Scheme to be created within 3 months from the date of disbursal of loan.
• No additional collateral will be insisted for additional funding under this SIDBI's Scheme.

The validity of TWARIT Scheme

The Timely Working Capital Assistance to Revitalise Industries in Times of Corona Crisis Scheme is valid up to October 31, 2020, or till notification by National Credit Guarantee Trustee Company whichever is earlier.

Processing Fee

As mentioned above, an additional processing fee will not be charged by SIDBI since additional credit under TWARIT is provided to existing customers

TWARIT Scheme Application Procedure

For ease of doing business, the TWARIT scheme has an automatic pre-approve mechanism, which means the applicant does not have to approach the SIDBI for the loan. SIDBI will furnish an offer letter to the eligible borrowers for a preapproved loan which the borrower may choose to accept. If the MSME accepts the offer, then the applicant required to complete requisite documentation. If the borrower is not interested in availing the loan, the applicant may indicate accordingly. As part of this scheme, a separate loan account will be opened for the borrower for extending additional credit. This new account will be distinct from the existing loan account of the borrower