In the duration of the Coronavirus pandemic and to assist COVID-19-affected enterprises. The RBI has given SIDBI (SLF-2) another liquidity facility of Rs.15000 crore to meet the MSME firm’s liquidity and credit needs. Special programs are being created to support MSMEs through banks, NBFCs, and MFIs to kick off the SLF-2. To ensure broader coverage, the Scheme to Assist MSME Liquidity Needs through Intermediaries would include all qualified firms with investment-grade ratings, regardless of the organization.
SPECIAL LIQUIDITY FACILITIES (SLF-1)
Last year, the RBI supplied SIDBI with a particular liquidity facility of Rs.15000 crore (SLF-1). As a result, the SIDBI has developed specific liquidity programs to assist MSME sectors that have been affected by the COVID-19 outbreak.
SPECIAL LIQUIDITY FACILITIES (SLF-2)
The SIDBI has announced the following special liquidity schemes as per the Scheme to help MSME sector liquidity needs through mediators for support to MSME sectors afflicted by the COVID-19 epidemic to operationalize the SLF-2:
- Exceptional liquidity support for MSME through MFI(SLS-II-MFI 2021).
- The Special refinance Scheme (SLS-II-SRS 2021).
- NBFCs provide great liquidity support for MSME (SLS-II-NBFC 2021).
SPECIAL REFINANCE SCHEME (SLS-II-SRS)
The Scheme intends to offer qualifying PLIs with refinancing support to help them meet the liquidity needs of their Micro and Small Business end-borrowers.
The following are the qualifying criteria and other requirements for the Special Refinance Scheme 2021 for MSME Liquidity Support:
ELIGIBILITY FOR SCHEME
This plan is open to commercial banks (public, private, and foreign) and small finance banks (SFBs). SIDBI will provide support under the program to scheduled banks with large existing portfolios of MSEs/microcredit and sound financials who meet the following criteria:
Small Finance Bank
During the first three years, the SFB and the previous business preceding conversion to SFB (considered together) should have made a profit. The RBI has granted the SFB a final license to function as a Small Finance Bank, and it has begun operations. The SFB must adhere to the following Benchmarks requirements:
- Non-performing assets (NPAs) must be equal to or greater than 7% of net capital.
- The small finance bank’s net worth should be at least rupees 100 crores.
- The small finance bank’s Capital to Risk(Calculated) Assets Ratio (CRAR) should be at least 15%.
The bank must have been in business for at least three years and profit in a minimum of two of the previous three financial years. The bank should follow the following guidelines, as per the certified financial statements:
- The bank must have a minimum net value of Rs.50 crore.
- The bank’s capital to risk-calculated assets ratio should not be just under 9%.
- To be qualified for this plan, the bank’s total non-performing assets (NPAs) must not exceed 10% of its total assets.
SECURITY UNDER THIS SCHEME
This loan’s private security is centered on the Complete Consensus. The bank shall maintain in deposit for SIDBI all assets acquired directly or indirectly from MSME, including movable and immovable properties, book debts, receivables, executable claims, guarantees, assigns, transfer of funds, and other protections.
- The loan under the unique liquidity program must be returned within 12 months or by June 10, 20211, whichever comes first.
- Under the SRS 2021, SIDBI will provide a 36-year repayment period for the loan, supplemented by SIDBI’s own money.
BENEFITS OF THE SCHEME
The plan is open to any organization that meets the definition of a micro or small business as defined by the Medium Enterprises Development Act of 2006 or the term specified in a GoI Gazette Notification. MSE end customer accounts up to SMA-1 type are qualified for refinancing under the scope of ECLGS 2.0 in the healthcare industry and 26 other higher stress areas.
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