Credit Guarantee Scheme for Subordinate Debt (CGSSD)

1. If it is difficult to provide an outright loan to the promoter, a sub-debt with guarantee will ensure that the MSME unit is given the necessary financial assistance to function.
2. For MSMEs which have become NPAs or are on the brink of turning into one, subordinate debt will ensure that the unit is able to revive itself and function in a sustainable manner.
3. MSME promoters will be provided credit equal to 15% of their stake or Rs.75 lakh, whichever is lower.

Eligibility Criteria

The eligibility criteria are given below:

1. MSMEs whose account has been operational since 31 March 2018, or has been deemed a standard or an NPA account during the financial years 2018-19 and 2019-20 can apply for this scheme.
2. Fraud or willful defaulters will not be considered eligible to apply for this scheme.
3. The promoters of the MSME units will be provided with a personal loan. These units can be partnerships, private limited companies, registered companies, proprietorships, etc.
4. MSME units which are stressed and are considered to be SMA-2 or NPA accounts as of 30th April 2020 can apply for this scheme.

Impact of CGSSD

The extended impact of CGSSD scheme is given below:

1. The total provision of sub-debt is Rs.2,000 crore as per the scheme, which is likely to benefit 2 lakh MSME units.
2. This scheme will help the promoters conduct business without any worries and look for present business opportunities.
3. The scheme will also allow the MSME units to function in a smooth manner, provide employment, and contribute to the national economy.

How to apply for CGSSD scheme

Promoters who meet the eligibility criteria can approach any commercial bank and apply for this scheme by providing the necessary documents and enjoy its benefits.