Interest Subvention Scheme for MSMEs

Purpose of Interest Subvention Scheme

The objectives of the interest subvention scheme are as follows:

• To increase productivity in service and manufacturing enterprises.
• To give incentives to the MSMEs for onboarding GST for encouraging growth in the economy, thereby reducing the cost of credit to the MSMEs.

Eligibility of Interest Subvention Scheme

• All MSMEs meeting the following criteria are eligible under the scheme:
  • MSMEs having valid Udyog Aadhaar Number (UAN)
  • MSMEs having a valid GSTN. However, the MSMEs which are not eligible to obtain GST need not have a GSTN, and they can apply for this scheme by submitting their Permanent Account Number (PAN), or the concerned bank must categorise their loan account as MSME.
• Trading activities are covered under the scheme even without UAN.
• MSME exporters availing interest subvention for post-shipment or pre-shipment credit under the department of commerce are not eligible for assistance under the scheme.
• MSMEs already availing interest subvention under any of the state/central government schemes will not be eligible under the scheme.

Benefits Provided Under the Interest Subvention Scheme

The scheme offers a 2% p.a. interest relief on MSME loans from the disbursal date or scheme notification, whichever is later. This applies to fresh/incremental working capital or term loans sanctioned by eligible institutions.

Applicability of the Interest Subvention Scheme

MSMEs can claim a 2% interest subvention on loans up to ₹100 lakh from eligible institutions. They may also claim it on fresh/incremental working capital from multiple banks. After COVID-19, the scheme expanded to include co-operative banks, covering loans sanctioned from 3rd March 2020 to 31st March 2021.

Implementing Agency of Interest Subvention Scheme

SIDBI implements the interest subvention scheme, requiring lending institutions to submit accurate data and monitor claims. Nodal offices must file half-yearly claims per scheme guidelines. MSMEs can apply directly through eligible lenders, with subvention released based on auditor-certified claims. SIDBI disburses funds as available, while the MSME Ministry holds the final authority on all matters.