Small Industries Development Bank of India (SIDBI), the principal financial institution engaged in the promotion, financing and development of Micro, Small & Medium Enterprises (MSMEs), has launched special liquidity scheme for Micro, Small and Medium Enterprises (MSMEs) through banks including Small Finance Banks (SFBs), Non-Banking Financial Companies including fintech NBFCs and Microfinance Institutions (MFIs). The scheme would provide financial support to banks, NBFCs and MFIs by way of term loans to ensure operational continuity and promote onward lending to MSMEs. The tenor of these loans will be 90 days.
Shri Mohammad Mustafa, IAS, Chairman and Managing Director of SIDBI said, “We are continuously working towards helping MSMEs survive the crisis created due to the COVID-19 pandemic. Keeping the current situation in mind, we were provided a special liquidity window of Rs. 15,000 crore by the Reserve Bank of India (RBI) to enable MSMEs to tide over their liquidity crunch. The funds will be channelised to MSMEs through eligible banks, NBFCs and MFIs. We hope through this, MSMEs liquidity issues shall be addressed, timely and adequately.”
To be eligible under this scheme, a bank (public sector bank, private sector bank, foreign bank and SFBs) should have a sizeable outstanding loan portfolio to Micro and Small Enterprises (MSEs)/micro credit and sound financials. As a bank (public sector, private and foreign) they should have been in operation for a minimum period of three years and should have earned profit for a at least two years out of the last three years. As per the last audited balance sheet, the bank should have a networth of minimum Rs. 100 crore, a Capital Adequacy Ratio (CAR) of not less than 9 percent and net Non-Performing Assets (NPA) ratio not exceeding 10%.
SFBs (including previous entry prior to conversion into SFB) should have earned profit during the last two years out of the three years of operation. The networth required is a minimum of Rs. 100 crore, the CAR should be at least 15 percent and the net NPA ratio should not be greater than 7 percent.
The eligible NBFCs will be the ones which are registered with RBI as Investment and Credit Company (ICC) and should have been in business for at least 3 years. They should have a minimum net owned funds of Rs. 20 crore and asset size of at least Rs. 50 crore. The credit rating of the NBFCs should be a minimum of ‘BBB-‘ or equivalent as on March 31, 2020. They should also have complied to applicable regulatory requirements and the promoter/equity should not be in any RBI blacklist or defaulters list. Besides that, the CAR should always be above RBI requirements during the last 24 months.
For MFIs to be eligible, they should have been in operation for at least three years and registered as a society, trust, company/section 8 company, NBFC-MFI or co-operative society. The MFIs should have a credit rating of at least ‘BBB-‘ or equivalent as on March 31, 2020 and the promoter/equity should not be in any RBI blacklist or defaulters list. The CAR requirement should not be below RBI requirements in the past 24 months and should have complied with regulatory RBI guidelines.