Micro, Small and Medium Enterprises (MSMEs) are essential to boost the economy of the country and thus, the Government of India has been focusing on the expansion of MSMEs and formation of new MSMEs by providing them with the required financial help in the form of small business loan, collateral-free loans. The Government has launched many MSME loans to encourage the formation of new entities under MSMEs.
Micro, Small and Medium Enterprises (MSMEs) are essential to boost the economy of the country and thus, the Government of India has been focusing on the expansion of MSMEs and formation of new MSMEs by providing them with the required financial help in the form of small business loan, collateral-free loans. The Government has launched many MSME loans to encourage the formation of new entities under MSMEs.
What is Interest Subvention Scheme for Micro, Small and Medium Enterprises (MSMEs)?
The Government of India has launched the scheme to provide small business loans, collateral-free loans to both manufacturing as well as service entities falling under MSME, to expand their business & flourish along with providing incentives. Getting MSMEs onboard the GST platform will help formalize the country’s economy.
The Government of India has launched the scheme in 2018 for its implementation in FY 2018-2019 and FY 2019-2020 but now it has been extended until March 31, 2021 by the notice issued by the Reserve Bank of India (RBI).
The scheme provides an interest relief of two percent per annum to all GST registered MSMEs on the MSME loan/collateral-free loan/small business loan.
What are the 4 key changes in the scheme?
Owing to certain hindrances, the objectives of the scheme were unable to be met to the point. And due to this, the Government had to make certain changes in the scheme to act as a stimulus and boost the MSMEs performance. This would further enhance the economy of the country. The 4 key changes implemented are as follows:
(1) Abolishment of UAN:
To be eligible under the scheme for MSME loan, the entities were required to have a valid Udyog Aadhar Number (UAN) and GSTN number. With this new change, the entities with valid GSTN number are eligible under the scheme. The entities without UAN will also be allowed to be covered under the scheme.
And for those entities which do not require GST number, may either submit Income TAX PAN or loan account number which recognizes them as MSME by the financial lender.
(2) Immediate Settlement of the Claims:
Small business loan and Collateral free loans are very necessary for an MSMEs as they need funds for their smooth daily operations and expansion plans. Without the funds, it will be difficult for an MSME to perform.
And thus, a change has been made with allows MSMEs to submit a statutory auditor certificate by June 30, 2020, and in the meantime, their claims will be settled based on the internal/concurrent auditor certificate.
(3) Extension in the submission of the claims:
For half-yearly, the Government has extended the last date of submission of the claim. This comes as a huge relief for those MSMEs who have missed the filing date.
(4) National Trading:
MSMEs without valid UAN number is now allowed by the Government to take part in the trading activities. This will encourage MSMEs to take part in national trading and boost their business and, add to the development of the country’s economy.
What is the impact of the changes in the scheme?
MSMEs contribute to the economy of our country by creating employment opportunities, manufacturing, exporting, etc. It is very essential to get MSMEs onboard the GST platform because that will make our economy stronger and powerful.
With the key changes, the Government is aiming at more and more MSMEs to be registered under the scheme which will create more employment opportunities,
enhance their productivity as they will have access to MSME loans/small business loans at a reduced cost. This will help to boost the economy of our country, Also, with this, India may become a self-reliant country – Swadeshi.
FAQs:
(1) When was the Interest Subvention Scheme for MSMEs launched?
It was launched in November 2018.
(2) What does Interest Subvention mean?
Subvention means a grant of money by the Government and by Interest Subvention, it is intended that the Government shall bear a part of the interest being charged for the MSME loan.
(3) When is the last date to submit the claims?
Earlier, the last date of submission of claims was March 31, 2020, but it has now been extended until March 31, 2021.
(4) Who is eligible to lend financial help under this scheme?
Initially, only the scheduled commercial banks were allowed to provide the MSME loan under this scheme but as per the change, the Government has decided to include the co-operative banks also as an eligible lender. This will enable MSMEs to have wider access to the much-needed financial help.
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