1. Which are the MSME’s constitution included under the Scheme?

MSME units such as Individuals / Proprietorship, LLP, Partnership, Private Limited Company or registered company are eligible to be covered under the scheme.

2. Whether any margin money is required to be brought in by the promoters for availing the sub-debt facility?

Yes. The promoters are required to bring in 10% of the sub-debt amount as collateral.

3. What is the duration of the Scheme?

The Scheme would be applicable to sub-debt sanctioned under CGSSD for a maximum period of 10 years from the date the guarantee is availed or till an amount of ₹ 20,000 crore of guarantee amount is approved or till the validity of the scheme.

4. What will be the eligibility criteria for MSMEs to avail the benefit of the Scheme?

All MSME borrower / entities who are stressed viz. SMA2 and NPA accounts and are eligible for restructuring (as per RBI guidelines) and are commercially viable as per the assessment of the lending institutions.

5. Whether the MSME account where the legal / recovery proceedings are underway are eligible under the Scheme?

Yes. In cases where recovery proceedings are underway, such as through SARFAESI Sec. 13(2), 13(4), DRT, suit filed, restructuring, MLIs may carry out on the basis of viability of the MSMEs as per RBI’s restructuring guidelines.

6. Whether Fraud / Willful default account are eligible under the scheme?

Accounts declared as Fraud/ Willful defaulter will not be considered under the scheme.

7.What would be the procedure followed in case a borrower has loan accounts with multiple lenders?

In case a borrower has existing limits with more than one lender, the CGSSD can be availed by the borrower through one lender only. A declaration from the borrower regarding its other banking arrangements and that it has not availed funding under the scheme from the other lenders to be obtained by the lending MLI.

8. To avail sub-debt under DAF-SDSM, will it be necessary for existing loans of the borrower to be covered under existing guarantee schemes such as CGFMU or CGTMSE?

No.

9. Will the interest rate on DAF-SDSM be capped?

Yes. The interest rate applicable would be as per extant RBI guidelines.

10. What would be the tenor of loans provided under DAF-SDSM??

The tenor of sub-debt facility provided under DAF-SDSM shall be as per the repayment schedule defined by the lender, subject to a maximum tenor of 10 years.

11. What would be the tenor of loans provided under CGSSD?

Maximum tenor would be 10 years.

12. Is there any moratorium period prescribed under DAF-SDSM?

Yes. There can be a moratorium of 7 years (maximum) on the payment of principal. Till the 7th year, only interest will be paid. While the interest on the credit facility provided under the scheme would be required to be serviced regularly (monthly), the principal shall be repaid within a maximum of 3 years after completion of moratorium.

13.Whether prepayment of sub-debt facilities is allowed?

Pre-payment of loan/credit facilities is allowed at no additional charge to the borrower.

14. I was running a business and my account turned into NPA due to certain reasons. However, my unit is not running now and it is closed. Am I eligible under the scheme?

No. For availing this sub-debt, the unit must be in running condition and operational.

15. Whether funding under CGSSD scheme can be given to the entity concerned?

No. The Scheme provides funding to Promoters of the MSME unit, and not to the entity concerned.

16. Whether the present scheme envisages additional funding to MSMEs with aggregate exposure limit above Rs 25 crore?

All accounts can be restructured on down-gradation of asset class. An NPA account is already downgraded and can therefore be restructured, even above ₹25 Crore.

17. How to arrive at eligibility for borrowers who are not required to obtain Audited Balance sheet as per statute?

For entities which are not mandated to get their balance sheets audited, lenders may obtain a CA’s certificate or the latest ITR return for calculating the equity /debt contribution of the promoter.

18. Whether accounts which are SMA 2 or NPA as on February 29, 2020 and not irregular on April 30, 2020 can be considered for additional finance under this scheme?

Only accounts which are classified as SMA-2 or NPA as on April 30, 2020 are eligible under the scheme.

19. Whether other legal entities such as Trust/ Society etc. are eligible under the scheme?

Loans under sub-debt scheme can be extended to management committee executives of trust /Society or the Karta of the HUF as per the extant by-laws /resolutions passed by the entity concerned based on the commercial judgement of the banks. Provided such Trust /Societies /HUF are registered as a MSME and fulfil the eligibility criteria stipulated under the Scheme. It may, however, be noted that management committee executives of the Trust / Society may not be willing to take a personal loan and invest it as equity in the Trust / Societies would normally be ‘ not for Profit’ and hence, payment of dividend on equity contribution would normally not be permitted in their case.

20. Whether the promoter has to bring in 10% of the loan amount as cash collateral only?

Yes. Borrower’s own contribution of 10% has to be as cash collateral.

21. Whether account opened after 31.03.2018 and fulling other conditions is eligible under CGSSD scheme.

Accounts that were opened after 31.03.2018 are currently not eligible under the Scheme.

22. Whether the accounts which were restructured before introduction of CGSSD, are eligible for coverage under CGSSD? Further, whether such assistance would be treated as repeated restructuring?

As per the Scheme guidelines, accounts which are eligible for restructuring can be covered under CGSSD. However, restructuring of the account, per se, is not mandatory for coverage under CGSSD. Accordingly, any account which has been restructured prior to introduction of CGSSD and satisfies other eligibility criteria, can also be covered under the Scheme. Further, it has also been clarified that credit facility sanctioned under Sub Debt Scheme would not amount to restructuring of the entity concerned. Also, since under the Scheme, assistance is provided to the promoters in the form of personal loan and not to the MSME unit, it should not be treated as repeated restructuring of the account.

23. Please clarify whether the term “regular in operation”, used in clauses 5(v) and 8(i), refers to ‘operation in the account of the MSME with the banks’ or ‘operation in the unit concerned’?

It is clarified that the term “regular in operation”, in the captioned clauses refer to regular operation / functioning of the MSME unit. Accordingly, the unit should be functional during FY 2017, FY 2018, FY 2019 and FY 2020, irrespective of the transactions in their bank accounts.

24. Please clarify whether accounts opened after 01.01.2016 and which are fulfilling other terms and conditions of the Scheme are eligible for coverage.

No. It has been decided that accounts opened after 01.01.2016 and fulfilling other terms and conditions of the Scheme are not eligible for coverage under the Scheme.

25. Is a Chartered Accountant’s certificate is required to be obtained for substantiating infusion of sub-debt /credit released to the promoter into the business as equity/quasi equity/sub-debt ?

It is not required to obtain Chartered Accountant’s certificate. However, MLI should ensure that the sub-debt / credit released to the promoter is brought back as equity / quasi equity / sub-debt in the MSME unit.

26. Any cut-off date / eligibility is prescribed for MSMEs for availing the benefit under the Scheme?

The scheme is applicable for those MSMEs whose accounts have been standard as on 01.01.2016 and have been in regular operations, either as standard accounts or as NPA accounts during the financial year 2016-17, 2017-18, 2018-19 and 2019-20 even if they did not remain in regular operation in FY 2020-21 & FY 2021-22 provided such accounts are viable as per MLI’s assessment and expected to come out of financial stress by availing this facility.