{"id":25551,"date":"2021-02-05T14:43:58","date_gmt":"2021-02-05T09:13:58","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=25551"},"modified":"2021-02-05T14:44:01","modified_gmt":"2021-02-05T09:14:01","slug":"interest-subvention-scheme-for-msme","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/interest-subvention-scheme-for-msme\/","title":{"rendered":"Interest Subvention Scheme for MSME: Strengthening the Foundation of Indian Economy"},"content":{"rendered":"\n<p class=\"has-drop-cap\">MSME is Micro, Small and Medium Enterprises enacted by Government of India under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The objective behind introducing this Act was to encourage the promotion and&nbsp;growth&nbsp;of <a href=\"https:\/\/corpbiz.io\/msme-registration\"><strong>MSME<\/strong><\/a> in production, manufacturing, processing or preservation of goods and commodities and boosting the competitiveness of micro, small and medium enterprises in the market along with the development of rural areas. Government comes up with the scheme for MSME for furthering goals aiming growth and development of the nation. One of such scheme is Interest Subvention Scheme for MSME. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/interest-subvention-scheme-for-msme\/#MSME_as_the_Foundation_of_Indian_Economy\" >MSME as the Foundation of Indian\nEconomy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/interest-subvention-scheme-for-msme\/#The_Interest_Subvention_scheme_for_MSME\" >The Interest Subvention scheme for MSME<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/interest-subvention-scheme-for-msme\/#Latest_Further_Extension_in_the_Validity_Period\" >Latest: Further\nExtension in the Validity Period<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/interest-subvention-scheme-for-msme\/#Which_is_the_Authority_to_implement_this_Scheme\" >Which is the Authority to implement this Scheme?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/interest-subvention-scheme-for-msme\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"MSME_as_the_Foundation_of_Indian_Economy\"><\/span>MSME as the Foundation of Indian\nEconomy<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>These industries or\nenterprises are the foundation of Indian economy and they need proper aiding\nand security from other big companies as they are still developing and they\nlack capital and advance technology. Thus, the aim of the Government of India\nis to come up with some schemes, rebates or guidance for the development of\nthese enterprises. <\/p>\n\n\n\n<p>Because of MSME we have approximate 8% of India\u2019s GDP, it has employed over 110 million people, and it has a huge share of 40% in the exports market and 45% in the manufacturing sector. Therefore, the Government in a new scheme has come up with subvention of interest scheme for MSME with the broader aim for boosting the sector.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/how-msme-registration-can-ensure-business-growth\/\">How MSME Registration Can Ensure Business Growth?<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Interest_Subvention_scheme_for_MSME\"><\/span>The Interest Subvention scheme for MSME<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Government of India has to ensure from time to time that scheme for MSMEs should continue to advance the economic growth of the country. So, Hon\u2019ble Prime Minister has announced 2% interest subvention scheme for MSME i.e. for all <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>GST registered<\/strong><\/a> MSMEs, on fresh or incremental loans<\/p>\n\n\n\n<ul><li>The interest subvention will be\n2% per annum on the outstanding balance from the date of drawal or the date of\nnotification of the scheme, whichever is later.<\/li><li>It has to confirm to the Code of Ethics and Fair\nPractices Code as according to the respective institutions and RBI guidelines.<\/li><li>&nbsp;At\nthe date of filing the claim amount the amount of the loan should not be\ndeclared as a Non-Performing Asset (NPA) <\/li><li>The\nscheme\nfor MSME \u201cInterest\nSubvention Scheme for Incremental credit to MSMEs 2018\u201d has to be implemented from\n2018-19 and 2019-20 as has been decided by The Ministry of MSME.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Purpose of the Interest Subvention Scheme\nfor MSME<\/h3>\n\n\n\n<p>The purpose of introducing this Scheme for MSME\nis to encourage for increasing productivity for manufacturing and service\nenterprises and availing of incentives to MSMEs for enlisting it on GST\nplatform which will further help in organization of better economy and reduce\nthe credit cost.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Eligibility Criteria<\/h3>\n\n\n\n<p>When the scheme was introduced its eligibility criteria included, which are as follows:-<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/When-the-scheme-was-introduced-its-eligibility-criteria-included-which-are-as-follows.png\" alt=\"When the scheme was introduced its eligibility criteria included which are as follows\" class=\"wp-image-25561\" width=\"385\" height=\"484\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/When-the-scheme-was-introduced-its-eligibility-criteria-included-which-are-as-follows.png 795w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/When-the-scheme-was-introduced-its-eligibility-criteria-included-which-are-as-follows-239x300.png 239w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/When-the-scheme-was-introduced-its-eligibility-criteria-included-which-are-as-follows-768x966.png 768w\" sizes=\"(max-width: 385px) 100vw, 385px\" \/><\/figure><\/div>\n\n\n\n<h4 class=\"wp-block-heading\">Changes in the Eligibility Criteria<\/h4>\n\n\n\n<p>But later on, the <strong><em>Government of India<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Government_of_India\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> brought changes to its eligibility criteria so that the benefit of the scheme is properly availed. The modification in the scheme was done with the hope that it will result in fulfillment of the objectives of the scheme. <\/p>\n\n\n\n<ul><li>Removed the requirement of Udyog Aadhaar Number (UAN) for units eligible for GST<\/li><li>Both the UAN and GSTN numbers are not mandatory for availing this scheme<\/li><li>Ease the flow of credit to MSMEs<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Latest_Further_Extension_in_the_Validity_Period\"><\/span>Latest: Further\nExtension in the Validity Period<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The government of India has\nfurther extended the validity of the order for the provision of interest relief\nof 2% per annum to MSMEs under the Interest Subvention Scheme to March 31,\n2021.<\/p>\n\n\n\n<p>Accordingly, it will cover fresh\nor incremental term loan \/ working capital limit under the scheme which is\nextended by co-operative banks with effect from March 3, 2020 only. The announcement\nof the government on November 2, 2018, to offer interest relief on loans for Rs\n1 crore will further be implemented for till 31<sup>st<\/sup> March, 2021.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Which_is_the_Authority_to_implement_this_Scheme\"><\/span>Which is the Authority to implement this Scheme?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>The sole national level authority to implement this scheme is Small Industries Development Bank of India (SIDBI) <\/li><li>The lending institutions shall be responsible for their own submission and that their data must be accurate according to the scheme.<\/li><li>Ministry of MSME, Government of India will be the highest authority for all the matters related to interest subvention and their decision would be binding and final.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Who are eligible to submit the claim?<\/h3>\n\n\n\n<ul><li>Nodal office of the\nlending institution <\/li><li>Loans disbursed\ndata and claims of interest relief should be in excel sheet soft copy by\nlending institutions.<\/li><li>The lending\ninstitutions will submit their claims of disbursed loans and claim interest\nevery half yearly to the Small Industries Development\nBank of India (SIDBI). The MSMEs will have to submit\na notarized affidavit to their respective banks for availing the benefit.<\/li><li>The statutory auditors should have certified all the claims.<\/li><li>The Chief General Manager, Institutional Finance Vertical, SIDBI will be the appropriate authority to submit the half-yearly claims.<\/li><li>Only after the availability of funds by Ministry of MSME it shall pay the particular institution accordingly.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Impact of\nInterest Subvention Scheme under Budget 2021-2022<\/h3>\n\n\n\n<p>It was expected that the\ntwo&nbsp;percent interest subvention scheme for micro, small and medium\nenterprises (MSMEs) on loans should be&nbsp;extended with improved &amp; more\ncoverage of three-four per cent to the extent of&nbsp;\u20b9&nbsp;300 lakh. <\/p>\n\n\n\n<p>Moreover, because of the recent\nunemployment due to the Covid-19 pandemic there was a need to increase the\ninterest rate of the scheme for MSME so that the scheme can generate more\nemployment and could have attracted more MSMEs on board but nothing went according\nto the expectation. <\/p>\n\n\n\n<p>As the government has earlier\nalready extended the time period for applying for loans under Interest\nSubvention Scheme for MSME which is valid till 31<sup>st<\/sup> March so the\nBudget 2021 had no plans to come up with any further relaxation in the scheme\nfor MSME. However, if the Government is satisfied that there is a need to\nincrease the interest rates then it can come up with the guidelines anytime\nsoon.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Government of India will keep planning out schemes for the\ngrowth of MSMEs and the Interest Subvention Scheme is one of the most crucial\nschemes to boost the development of MSMEs in India. By including co-operative\nbanks it has further widened the approach for the MSMEs to receive credits\nwhich is equally beneficial for the development of Co-operative Banking Sector\ndue to their small customer base. <\/p>\n\n\n\n<p>Moreover, the subvention of interest at 2% per annum will further\nprove to be beneficial because MSMEs are emerging and generating more and more\nemployment in India. &nbsp;Since the major plan of Interest Subvention scheme\nfor MSME on-board with Goods &amp; Sales Tax, this relaxation of 2% will make\nthe work done in an easier way. <\/p>\n\n\n\n<p>Thus, this will also give an opportunity for different eligible units to&nbsp;&nbsp; enlarge their businesses with the help of Government and hence this will in turn contribute to the growth and development of national economy.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/procedure-to-avail-msme-registration-certificate-in-india\/\">Procedure to Avail MSME Registration Certificate in India<\/a><\/mark><\/p>\n\n\n<a href=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/ISS5D09963F430140329CD88683ACC7707F.pdf\" class=\"pdfemb-viewer\" style=\"\" data-width=\"max\" data-height=\"max\"  data-toolbar=\"bottom\" data-toolbar-fixed=\"off\">ISS5D09963F430140329CD88683ACC7707F<br\/><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>MSME is Micro, Small and Medium Enterprises enacted by Government of India under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The objective behind introducing this Act was to encourage the promotion and&nbsp;growth&nbsp;of MSME in production, manufacturing, processing or preservation of goods and commodities and boosting the competitiveness of micro, small and medium [&hellip;]<\/p>\n","protected":false},"author":33,"featured_media":25560,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[176],"tags":[1508],"acf":{"service_id":"71"},"authorName":"Kandarp Vanita","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/image_2021_02_01T09_09_44_024Z.png","authorDescription":"Kandarp Vanita has done masters in Corporate and Commercial Law from WB National University of Juridical Sciences. She has 3 yrs of experience in drafting legal documents &amp; dissertations. Being a curious reader, she is also passionately into providing legal backups and comprehensive understandings in every aspect of Law to the firms.","postViews":5085,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/25551"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/33"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=25551"}],"version-history":[{"count":8,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/25551\/revisions"}],"predecessor-version":[{"id":25566,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/25551\/revisions\/25566"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/25560"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=25551"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=25551"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=25551"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}