MSE Green Investment and Financing for Transformation Scheme

Interest subvention of 2 per annum for period of 5 years up to a term loan limit of INR 2 crores for Micro and Small enterprises

Promotion and adoption of green technologies and clean energy sources in MSEs is critical for making MSEs in India sustainable. India has also committed to reducing emissions intensity by 45 percent by 2030, from the 2005 level to the United Nations Framework Convention on Climate Change (UNFCCC). Indias existing Nationally Determined Contributions (NDC) includes its long-term goal of reaching net zero by 2070.

In order to address these challenges faced by MSEs and fulfill the commitments made with respect to sustainability, the Ministry of MSE has launched sub scheme named MSE Green Investment Financing for Transformation (MSE GIFT) Scheme under the RAMP Programme. RAMP is a World Bank supported Central Sector Scheme aimed at improving access of MSEs to credit, market, and technology.

The overall objective of the MSE GIFT Scheme is to provide support to the MSEs in accessing institutional finance at a concessional rate for adopting clean / green technologies and help them to transform into green and sustainable business operations.

MSE Green Investment and Financing for Transformation Scheme Objective Image

Objectives

To promote the adoption of sustainable and eco-friendly practices and technologies and renewable energy sources.
To provide concessional financial assistance to MSEs for investments in the adoption of green technologies and practices.
To create awareness about the best practices, promote knowledge sharing and benefits of the adoption of green technologies and practices.

Benefits

Interest Subvention Facility for MSEs : All loans under this financing facility will have an interest subvention of 2 per annum up to a term loan limit of INR 2 crores. This subvention will be available to MSEs for a maximum period of 5 years.
Risk Sharing Facility : All loans to MSEs up to INR 2 crore would be covered under the Risk Sharing Facility to be executed by SIDBI. The eligible MSEs would be offered financial assistance under the hybrid model, wherein the project assets, available collateral, and RSF would ascertain the risk mitigation to financial institutions. RSF, MSEs would require paying a guarantee fee following the Guarantee fee structure of CGTMSE, which is as under: Loans Above INR 10 lakh upto INR 50 lakh 0.55 Loans Above INR 50 lakh upto INR 1 crore 0.60 Loans Above INR 1 crore upto INR 2 crore 1.20 per annum (plus applicable GST) on sanctioned amount (first year) and on the outstanding amount every subsequent year
Additional concession/relaxation in Guarantee fee to MSEs owned by weaker section/underserved section would be as follows: Women/SC/ST/Persons with Disability (PwD)/Agniveers: 10% concession NER including Sikkim, UT of Jammu & Kashmir and UT of Ladakh (Upto INR 50 Lakh)/ Aspirational District): 10% concession. ZED Certified MSEs: 10% concession
IEC Facility (Information, Education Communication) Facility : The project entails the capacity building of bankers/lenders to make them ready to take up project financing in the green segment. Also, there is a need to create awareness, induce orientation for adoption, do a few showcases of successful benefits models/benefits, and so on. Thus, the CB fund will be utilized towards organizing seminars, and sensitization programs for the benefit of MSME lending or absorption ecosystem. A suitable MIS system would also be required for monitoring and progress of the project.

MSE Green Investment and Financing for Transformation Scheme Benefit Image

Eligibility

All the MSEs certified under Udyam Registration (both in manufacturing and service sector) will be eligible for Interest Subvention component of the MSEGIFT scheme.
All Udyam certified Micro and Small Enterprises (MSEs) (both in manufacturing and service sector) would be eligible for the Risk Sharing Facility component of the MSE-GIFT scheme.
MSEs availing benefit of guarantee cover under CGTMSE can not avail guarantee cover under MSE-GIFT scheme within the maximum limit permitted under CGTMSE.
All the assistance sanctioned after the date of notification of the scheme by MoMSME, GoI and would be in operation till such time the interest subvention corpus is fully committed or the tenure of the scheme, whichever is earlier.
To avail interest subvention for the first time after the project completion, the PFIs would submit following documents through online portal; (i) Sanction Letter, (ii) Declaration & Undertaking between the PFI and the borrower, (iii) Tax Invoice of eligible P&M covered under the project, (iv) Snapshot of geotagging of the project site, for review and approval at SIDBI.
The names of the promoters/directors/partners/proprietor should not be appearing in various defaulter lists /CFR/CIBIL/RBI/IBA third party list/caution lists etc. as per Bank’s guidelines.
The MSE unit should not be defaulted to any Banks/FIs/NBFCs, etc.
Any expenditure incurred on ‘civil works or major construction’ is excluded from the RAMP programme. Hence, the RAMP expenditure boundary will apply to MSE-GIFT scheme also.

How to Apply?

An MSE unit desirous of interest subvention / an MSE desirous of RSF may apply to a bank/PLI for a loan to finance the eligible investment.

The Bank/PLI approves the loan after due diligence.

RSF coverage to be obtained prior to disbursement of the loan after payment of RSF fee.

The Bank/PLI disburses the loan.

The Bank / PLI shall recommend the proposal for the interest subvention / RSF to SIDBI through online mode.

SIDBI shall examine the proposal in line with the guidelines of the scheme.

The interest subvention would be released by SIDBI into the account of the PLI of the applicant MSE on half yearly basis.

The beneficiary unit will have to remain in commercial production for a period of three years after the “reference date”, on which subsidy under the scheme has been availed.

In case the disbursement is in more than one instalment, the date of disbursement of the last instalment will be referred as the “reference date”.