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Liquidity Support to MSMEs through NBFCs

Scheme for Special Liquidity Support to MSMEs through NBFCs (SLS II-NBFC 2021)

  • To provide liquidity support to Micro and Small Enterprises (MSEs) impacted due to Covid-19 pandemic, through NBFCs. The scheme would provide resource support to NBFCs to ensure operational continuity and promote onward lending to MSE sector.
  • RBI registered NBFCs complying with the following parameters:
  • registered with RBI as Investment and Credit Company (ICC).
  • external rating BBB- & Superior
  • in lending business for 3 full accounting years and with 3-year audited accounts.
  • Minimum Net Owned Funds of `50 crore and Minimum Asset Size of `200 crore.
  • Should clear ‘Go / No Go Criteria’ as per Bank’s internal guideline.
  • Activities: As defined in section 2(h) of SIDBI Act, 1989 for bonafide business purposes.
  • Beneficiaries: MSEs as per the definition contained in GoI Gazette Notification S.O.2119(E) dated June 26, 2020.
  • Up to 12 months or June 10, 2022, whichever is earlier
  • Need based security as per Bank’s extant norms.
  • 0.10% of sanctioned amount, subject to maximum of `5 lakh, plus applicable GST.
  • NBFCs financing two-wheeler loans, unable to furnish certification of MSE status and NBFCs having majority portfolio of gold loans shall not be eligible under the scheme.

Refinance Scheme for MSE to Liquidity Support

Special Refinance Scheme – 2021 (SLS II-SRS-2021)

  • To provide refinance assistance to eligible PLIs to support liquidity needs of their Micro and Small Enterprises (MSEs) end-borrowers.
Scheduled Banks (Public, Private, Foreign and Small Finance Banks).
FOR BANKS (other than SFBs):
  • In operation for a period of 3 years.
  • Earned profit during the last 2 years.
  • Have sizable outstanding portfolio / financial assistance to MSEs.
  • Net-worth of not less than `50 crore.
  • Capital to risk weighted assets (CRAR) of not less than 9%;
  • Net NPAs not exceeding 10%.


FOR SFBs:
  • Should have been granted final license by Reserve Bank of India (RBI) for carrying on Small Finance Bank business and have commenced operations of the Small Finance Bank.
  • The SFB / previous entity prior to conversion into SFB (taken together) should have earned profits during at least 2 years out of the last 3 years.
  • Should have sizeable outstanding portfolio comprising advances to micro credit and / or MSEs; and
  • Should comply with the applicable Benchmarks norms for Sanction as under:
Sl. No. Parameter BfS Norms
1 Networth > or = `100 crore
2 CRAR > or = 15%
3 Gross NPA < or = 7%
  • End-borrowers - MSEs as per Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 / As per definition contained in GoI Gazette Notification S.O.2119(E) dated June 26, 2020
  • MSE end-borrower account up to SMA -1 category eligible to be covered under refinance as applicable under the scope of ECLGS 2.0 in the healthcare and 26 other high stress sectors (as identified by the Kamath Committee)
  • Activities - As defined in section 2(h) of SIDBI Act, 1989.
  • Up to 12 months or June 10, 2022, whichever is earlier.
  • Up to 36 months (which will be provided by augmenting with own funds from SIDBI).
  • The Bank shall hold in trust for SIDBI, all the securities including movable and immovable assets, book debts, receivables, actionable claims, guarantees, assignments, bills of exchange and proceed thereof as also other securities as may be directly or indirectly obtained or to be obtained by the bank from its borrowers to secure the financial assistance made available to the borrowers for which the loan has been sanctioned by SIDBI to the Bank.

Liquidity Support to MSMEs through MFIs

Scheme for Special Liquidity Support to micro finance clients through Micro Finance Institutions (SLS II-MFI-2021)

  • To provide funding support to MFIs impacted due to Covid-19 pandemic. The scheme would provide resource support to MFIs to ensure operational continuity and promote onward lending to micro finance clients.
  • In operations for 3 years
  • Registered as Society, Trust, Company/ Section 8 Company, NBFC-MFIs, Co-operative Society and MACS;
  • Have external rating of ‘BBB-‘or superior and minimum MFI grading of “MfR5”;
  • Capital Adequacy Ratio (CRAR) to be above that prescribed under RBI requirements (as per last audited balance sheet / last return filed with RBI; applicable in case of NBFC-MFI).
  • PAR > 90 days (AUM) should be <7% (relaxable up to 9%) as on March 31, 2021.
  • MFIs should have raised fresh borrowings from lenders other than SIDBI during FY 2021.
  • Should clear ‘Go / No Go Criteria’ as per Bank’s internal guideline. Should also meet other policy/ scheme guidelines.
  • Facilities extended to microfinance borrowers / clients by the MFIs.
  • Short term: up to 1 year or June 10, 2022, whichever is earlier.
  • In addition to short term tenure of 1 year, a longer tenure up to 3 years can also be considered on a case to case basis, depending on merits of the proposal (which will be provided by augmenting with own funds from SIDBI).
  • A) In case of liquidity Funding only:
  • Exclusive first charge by way of hypothecation of unencumbered book debts / receivables of minimum 1.1 times of the assistance, in favour of SIDBI.
  • Demand Promissory Note (DPN) of equivalent amount.
  • Post Dated Cheques (PDCs)
  • Personal Guarantee of Promoters / Corporate Guarantee.
  • In case of existing customer of SIDBI, the extension of charge on the FDRs shall be applicable.
  • B) In case of funding for On-ward lending
  • Exclusive first charge by way of hypothecation of book debts / receivables created out of the assistance availed from SIDBI.
  • Demand Promissory Note (DPN) of equivalent amount.
  • Post Dated Cheques (PDCs)
  • Personal Guarantee of Promoters / Corporate Guarantee.
  • In case of existing customer of SIDBI, the extension of charge on the FDRs shall be applicable.
  • 0.10% of sanctioned amount, subject to maximum of `10 lakh, plus applicable GST.