Frequently Asked Questions about MSME schemes

View all Questions
1 . Prime Minister's Economic Package for MSME Sector
2 . Government E-Marketplace
3 . Income Tax
4 . Goods and Services Tax
5 . Labour and Employment
6 . Transport and Movement of Essential Goods
7 . Industrial Regulations
8 . Skill Development
9 . MSME Schemes
10 . Public Procurement Policy
11 . Delayed Payment
12 . Finance
13 . Emergency Credit Line Guarantee Scheme of Rs. 3 lakh crore
14 . Employment Provident Fund Organization (EPFO)
15 . Mudra Scheme
16 . Announcements made under Special Economic Package
17 . Prime Minister’s Employment Generation Programme (PMEGP)
18 . Start Up India
19 . Support for Entrepreneurial and Managerial Development of SMEs through Incubators
20 . PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) : A Special Micro-Credit Facility for Street Vendors
21 . Support measures undertaken by Govt. in the wake of COVID 19 Pandemic
22 . Distressed Asset Fund - Subordinated Debt for Stressed MSMEs (DAF-SDSM) / Credit Guarantee Scheme for Subordinate Debt (CGSSD)
23 . Scheme for Fund for Regeneration of Traditional Industries (SFURTI)
24 . Building Awareness on Intellectual Property Rights (IPRs) for MSMEs
25 . Design Scheme for Design Expertise to MSME Sector
26 . "Digital Msme" Scheme for Promotion of Information and Communication Technology (ICT) in MSME sector
27 . “Financial Support to MSMEs in ZED Certification (ZED)” Scheme
28 . MSME TECHNOLOGY CENTRES
29 . Entrepreneurship and Skill Development Programme (ESDP) Scheme
30 . Promotion of MSMEs in NER-Sikkim
31 . MSME Testing Centers- Quality Facilitation for MSMEs
32 . MSME-Sampark
33 . Samadhaan Portal
34 . Consortia and Tender Marketing Scheme
35 . NSIC’s Raw Material Assistance Scheme
36 . Single Point Registration Scheme
37 . Sampark Portal
38 . Udyam Sakhi

Prime Minister's Economic Package for MSME Sector

Q 1 . What are the measures announced by the government under “Atmanirbhar Bharat” for MSMEs?

Ans : Ans : Keeping in view the hardship faced by MSMEs during COVID 19 pandemic crisis, the government has announced several measures intended to provide the necessary support to deal with the current economic crisis such as:
Rs 3 lakh crore Collateral-free Automatic Loans
Rs 20,000 crore Subordinate Debt for Stressed MSMEs
Rs 50,000 croreEquity infusion for MSMEs through Fund of Funds
Global tenders to be disallowed up to Rs 200 crore
Revised definition of MSMEs
All receivables of MSMEs will be cleared by Government and PSU in 45 days
For more details, please visit the url: Click here for announcement details.

Q 2 . What is revised definition of MSMEs?

Ans :
Existing MSME Classification
Criteria: Investment in Plant & Machinery or Equipment
Classification Micro Small Medium
Mfg. Enterprises Investment < Rs. 25 lakh. Investment < Rs. 5 cr. Investment < Rs. 10 cr.
Services Investment < Rs. 10 lakh. Investment < Rs. 2 cr. Investment < Rs. 5 cr.
Revised MSME Classification
Composite Criteria: Investment and Annual Turnover
Classification Micro Small Medium
Manufacturing
& Services
Investment < Rs. 1 cr.
and
Turnover < Rs.5 cr.
Investment< Rs. 10 cr.
and
Turnover < Rs.50 cr.
Investment< Rs. 50 cr.
and
Turnover < Rs.250 cr.

Q 3 . What is the Credit Guarantee Scheme for MSEs (CGTMSE)?

Ans : The Ministry of MSME, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) with a view to facilitate flow of credit to the MSE sector without the need for collaterals / third party guarantees. The main objective of the scheme is that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed. The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSE unit, which availed collateral - free credit facilities, failing to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 85 per cent of the outstanding amount in default.
The CGTMSE would provide cover for credit facility up to Rs. 200 lakh which have been extended by lending institutions without any collateral security and /or third-party guarantees. A guarantee and annual service fee is charged by the CGTMSE to avail of the guarantee cover. For more details you may visit www.cgtmse.in.

Q 4 . What is Trade Receivables Discounting System (TReDS)?

Ans : The objective of TReDS is to create Electronic Bill Factoring Exchanges which could electronically accept and settle bills so that MSMEs could encash their receivables without delay. This will not only give them greater access to finance but will also put greater discipline on corporates to pay their dues on time. For more details you may refer to RBI guidelines for setting up and operating TReDS on their website https://www.m1xchange.com/treds.php.

Q 5 . What is Trade Receivables Discounting System (TReDS)?

Ans : The objective of TReDS is to create Electronic Bill Factoring Exchanges which could electronically accept and settle bills so that MSMEs could encash their receivables without delay. This will not only give them greater access to finance but will also put greater discipline on corporates to pay their dues on time. For more details you may refer to RBI guidelines for setting up and operating TReDS on their website https://www.m1xchange.com/treds.php.

Q 6 . Who are the participants in TReDS?

Ans : Sellers, buyers and financiers are the participants on a TReDS platform.

Q 7 . Who can participate as a seller in TReDS?

Ans : Only MSMEs can participate as sellers in TReDS.

Q 8 . Who can participate as a buyer in TReDS?

Ans : Corporates, Government Departments, PSUs and any other entity can participate as buyers in TReDS.

Q 9 . Who can participate as a financier in TReDS?

Ans : Banks, NBFC - Factors and other financial institutions as permitted by the Reserve Bank of India (RBI), can participate as financiers in TReDS.

Q 10 . How does TReDS work?

Ans : Broadly, following steps take place during financing / discounting through TReDS:
- Creation of a Factoring Unit (FU) - standard nomenclature used in TReDS for invoice(s) or bill(s) of exchange - containing details of invoices / bills of exchange (evidencing sale of goods / services by the MSME sellers to the buyers) on TReDS platform by the MSME seller (in case of factoring) or the buyer (in case of reverse factoring);
- Acceptance of the FU by the counterparty - buyer or the seller, as the case may be;
- Bidding by financiers;
- Selection of best bid by the seller or the buyer, as the case may be;
- Payment made by the financier (of the selected bid) to the MSME seller at the agreed rate of financing / discounting;
- Payment by the buyer to the financier on the due date.

Q 11 . What is a Factoring Unit (FU)?

Ans : A Factoring Unit (FU) is a standard nomenclature used in TReDS for invoice(s) or bill(s) of exchange. Each FU represents a confirmed obligation of the corporates or other buyers, including Government Departments and PSUs.

Q 12 . Who can participate as a financier in TReDS?

Ans : Banks, NBFC - Factors and other financial institutions as permitted by the Reserve Bank of India (RBI), can participate as financiers in TReDS.

Q 13 . How does TReDS work?

Ans : Broadly, following steps take place during financing / discounting through TReDS:
- Creation of a Factoring Unit (FU) - standard nomenclature used in TReDS for invoice(s) or bill(s) of exchange - containing details of invoices / bills of exchange (evidencing sale of goods / services by the MSME sellers to the buyers) on TReDS platform by the MSME seller (in case of factoring) or the buyer (in case of reverse factoring);
- Acceptance of the FU by the counterparty - buyer or the seller, as the case may be;
- Bidding by financiers;
- Selection of best bid by the seller or the buyer, as the case may be;
- Payment made by the financier (of the selected bid) to the MSME seller at the agreed rate of financing / discounting;
- Payment by the buyer to the financier on the due date.

Q 14 . What is a Factoring Unit (FU)?

Ans : A Factoring Unit (FU) is a standard nomenclature used in TReDS for invoice(s) or bill(s) of exchange. Each FU represents a confirmed obligation of the corporates or other buyers, including Government Departments and PSUs.

Q 15 . Who can create a FU?

Ans : In TReDS, FU can be created either by the MSME seller or the buyer. If MSME seller creates it, the process is called factoring; if the same is created by corporates or other buyers, it is called as reverse factoring.

Q 16 . Whether TReDS could deal with reverse factoring?

Ans : Yes. The TReDS could deal with both receivables factoring as well as reverse factoring.

Q 17 . Whether the MSME seller would have to pay to the financier in case the buyer defaults in repayment?

Ans : No. The transactions processed under TReDS are “without recourse” to the MSMEs.

Q 18 . Whether any authorization is required to set up and operate a TReDS platform?

Ans : Yes, authorization is required to be obtained from RBI under the Payment and Settlement Systems (PSS) Act, 2007.

Q 19 . Whether TReDS entities undertake KYC (Know Your Customer) of participants?

Ans : Yes. The KYC process adopted by the TReDS entities shall adhere to the “Master Direction – Know Your Customer (KYC) Direction, 2016” dated February 25, 2016 (as amended from time to time) issued by RBI.

Q 20 . What is a settlement file and who generates it in TReDS?

Ans : A settlement file provides information as to how much amount has to be debited from and credited to the accounts of participants (sellers, buyers and financiers), due on a date / time. In other words, it indicates how much a financier has to pay to an MSME seller, and how much a buyer owes to the financier on a date / time. The TReDS entities generate the settlement file and send the same to existing payment systems (for instance, National Automated Clearing House) for actual payment of funds.

Q 21 . Whether defaults on TReDS platform are the responsibility of TReDS entities?

Ans : No. Default handling is outside the purview of TReDS platforms.

Q 22 . What is the definition of a sickunit?

Ans : As per the extant guidelines, a Micro or Small Enterprise (as defined in the MSMED Act 2006) may be said to have become Sick, if – Any of the borrower account of the enterprise remains NPA for three months or more OR There is erosion in the net worth due to accumulated losses to the extent of 50% of its net worth during the previous accounting year. This criterion enables banks to detect sickness at an early stage and facilitate corrective action for revival of the unit.

Q 23 . Are all sick units put under rehabilitation by banks?

Ans : No. If a sick unit is found potentially viable it can be rehabilitated by the banks. The viability of the unit is decided by banks. A unit should be declared unviable only if such a status is evidenced by a viability study.

Government E-Marketplace

Q 24 . Is there any specific initiative that has been taken by GeM in terms of Public Procurement?

Ans : GeM has taken number of initiatives for procurement of goods and services by Government departments in the fight against COVID-19 Pandemic. A dedicated page for COVID-19 has been created on the portal. You can find more information by visiting this link- https://gem.gov.in/covid19

Q 25 . What are pre-requisite for primary user registration?

Ans : The prerequisites for primary user registration are:
1. Aadhaar number of the user.
2. Mobile number which is linked with Aadhaar.
3. Email ids hosted by NIC, only NIC registered Email ids are allowed, this would facilitate users from all 1600+ domains to freely register and transact on GeM.
4. Verifying authority details such as name, mobile number and NIC registered email id.
Note: In case the user does not have an email id which is hosted by NIC s/he would be directed to open GeM buyer id email.

Q 26 . Is Aadhaar card mandatory for primary user registration?

Ans : Yes, Aadhaar is mandatory for primary user registration. Note: Aadhaar details collected by GeM are solely for user verification.

Q 27 . What are the key tasks of a primary user?

Ans : The key tasks of a primary user are:
Self-registration
Filling organization details
Creation/modifications of secondary users
Monitoring of orders placed
Administration of GeM procurements
In case the primary user gets transferred or retires from the organization, he/she needs to transfer the primary user account

Q 28 . How can a user verify his/her email id during registration?

Ans : You must have a NIC registered email id to register, upon entering the NIC registered email id like gov.in/nic.in etc. during registration, the email will be verified by NIC. On successful validation by NIC, the user will get an email message with a one-time password for continuing with the registration process.

Q 29 . How can a user verify his/her email id during registration?

Ans : You must have a NIC registered email id to register, upon entering the NIC registered email id like gov.in/nic.in etc. during registration, the email will be verified by NIC. On successful validation by NIC, the user will get an email message with a one-time password for continuing with the registration process.

Income Tax

Q 30 . What measures Government has taken towards refund of pending income-tax of all business entities and individuals?

Ans : In the context of the COVID-19 situation and with a view to provide immediate relief to the business entities and individuals, it has been decided to issue all the pending income-tax refunds up to Rs. 5 lakhs, immediately. For more information, please refer to the website of Ministry of Finance or visit : https://champions.gov.in/MyMsme/FaqspdfURL/Q39.pdf

Q 31 . What is the progress of IT refunds to MSMEs during the COVID – 19 lockdown?

Ans : The Central Board of Direct Taxes (CBDT) highlighted on 17.04.2020 that Income tax refunds to nearly 8.2 lakh small businesses (proprietors, firms, corporate and trusts) worth Rs 5,204 Crore have been issued since 8th April 2020. These income tax refunds would help MSMEs to carry on their business activities without pay cuts and layoffs in Covid-19 pandemic situations. Details can be found at https://champions.gov.in/MyMsme/FaqspdfURL/Q40.pdf

Goods and Services Tax

Q 32 . What measures have been taken towards filling of income tax returns considering COVID-19 situation?

Ans : The Union Finance & Corporate Affairs Minister has announced several important relief measures taken by the Government of India in view of COVID-19 outbreak, especially on statutory and regulatory compliance matters related to several sectors. Following measures has been taken w.r.t GST:

-Those having aggregate annual turnover less than Rs. 5 Crore Last date can file GSTR-3B due in March, April and May 2020 by the last week of June 2020. No interest, late fee, and penalty to be charged.
-Others can file returns due in March, April and May 2020 by last week of June 2020 but the same would attract reduced rate of interest @9 % per annum from 15 days after due date (current interest rate is 18 % per annum). No late fee and penalty to be charged, if complied before till 30th June 2020.
-Date for opting for composition scheme is extended till the last week of June 2020. Further, the last date for making payments for the quarter ending 31st March 2020 and filing of return for 2019-20 by the composition dealers will be extended till the last week of June 2020.
-Date for filing GST annual returns of FY 18-19, which is due on 31st March 2020 is extended till the last week of June 2020.
-Due date for issue of notice, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents, time limit for any compliance under the GST laws where the time limit is expiring between 20th March 2020 to 29th June 2020 shall be extended to 30th June 2020.
-Necessary legal circulars and legislative amendments to give effect to the aforesaid GST relief shall follow with the approval of GST Council.
-Payment date under Sabka Vishwas Scheme shall be extended to 30th June 2020. No interest for this period shall be charged if paid by 30th June 2020.
-The taxpayers who are already in composition scheme, in previous fiscal year are not required to opt in for composition again for FY 2020-2021.
-E-way bills (EWB), whose expiry date lies between 20th March 2020, and 15th April 2020, would also be deemed to be valid till 30th April, 2020.

For regular updates and more information, you may refer the website of Ministry of Finance and Corporate Affairs or visit https://champions.gov.in/MyMsme/FaqspdfURL/Q41.pdf

Q 33 . On what supply is GST levied?

Ans : GST is levied on all types of supplies which are – (i) made for a consideration and (ii) are for the purpose of furtherance of business. There are some exceptions when these conditions are not met, yet supply is considered to have been made, for example, interstate stock transfer of goods even without consideration or importation of services even if not in the furtherance of business.

Q 34 . Will GST be levied on all goods or services or both?

Ans : No, GST will not be levied on alcohol for human consumption. GST on Crude, Motor Spirit (Petrol), High Speed Diesel, Aviation Turbine Fuel and Natural Gas will be levied with effect from a datetobedecidedbytheGSTCouncil.Electricityandsaleoflandandbuildingareexemptedfrom levy of GST. Securities are neither good nor services for the purposes of the WBGST Act, 2017 and therefore supply of securities is not taxable.

Q 35 . I was registered under VAT but not under Central Excise. Do I need to apply for new registration?

Ans : No. Existing registrants of VAT having valid PAN have been issued Provisional ID and password. If you have not received provisional ID, please contact your tax administration to obtain the same. This Provisional Identity Number (PID) would eventually be your GSTIN, when the migration process is completed.

Q 36 . If I have obtained provisional GSTIN (PID), can I use the same on the invoice to make supply without waiting for final GSTIN?

Ans : Provisional GSTIN (PID) would eventually be your final GSTIN. The number would remain the same. Yes, you can use this PID on invoice for making supply without waiting for final GSTIN.

Q 37 . How will taxpayer get the certificate of registration?

Ans : The taxpayer can himself download the certificate of registration online from the GST common portal (www.gst.gov.in).

Q 38 . Are all manufacturers necessarily required to be registered under GST?

Ans : No, there is no provision requiring that a manufacturer irrespective of threshold or nature of supply to register himself under GST. For example, a manufacturer dealing only in exempted goods or where his turnover is only intra-State and below Rs. 20 lakh is not required to be registered.

Q 39 . In case of supply of exempt goods or when tax is paid under Composition Scheme, is the registered person required to issue a tax invoice? How a bill of supply is different from a tax invoice?

Ans : No. In such cases, the registered person shall issue a Bill of Supply and not a tax invoice. The bill of supply is different from a tax invoice both in name and details contained. While most of the details to be provided in a bill of supply are similar to tax invoice, the bill of supply does not contain the rate of tax and the amount of tax charged as the same cannot be collected.

Q 40 . If goods are transported in semi-knocked down condition, when shall the complete invoice be issued?

Ans : When goods are transported in semi-knocked down condition, the complete invoice shall be issued before dispatch of the first consignment. Delivery challan shall be issued for subsequent consignments. Original copy of invoice shall be sent along with the last consignment.

Q 41 . Is there any scheme for payment of taxes under GST for small traders and manufacturers?

Ans : Yes. Composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs. 75 lakhs (Rs.50 lakhs for special category States, excluding J&K and Uttarakhand). It is a kind of turnover tax. The objective of the scheme is to provide a simplified tax payment regime for the small taxpayers. The scheme is optional and is mainly for small traders, manufacturers and restaurants.

Labour and Employment

Q 42 . What are benefits being offered under Pradhan Mantri Garib Kalyan Yojana (PMGKY)?

Ans : Ministry of Labour & Employment has launched Pradhan Mantri Garib Kalyan Yojana (PMGKY) for the poor to help them fight the battle against Corona Virus Pandemic. Under the scheme, the entire employees EPF contributions (12% of wages) and employers’ EPF & EPS contribution (12% of wages), totaling 24% of the monthly wages for the next three months shall be directly paid by the Central Govt. in the EPF accounts (UAN) of employees, who are already members of EPF Scheme, 1952. For more information on the schemes, please refer the scheme guidelines at https://champions.gov.in/MyMsme/FaqspdfURL/Q51.pdf

Q 43 . Can you please elaborate on provisions made by Ministry of Labour & Employment with respect to Provident Fund?

Ans : The Ministry of Labour and Employment has been receiving several queries related to provident funds from the beneficiaries. In this regard, a set of Frequently Asked Questions (FAQs) along with clarifications are provided at Click here (https://champions.gov.in/MyMsme/FaqspdfURL/Q52.pdf) . for better understanding.

Q 44 . Can my employee withdraw advance from EPF to meet financial requirement during COVID-19 pandemic?

Ans : As per the government announcement on March 26, 2020, an individual can withdraw a certain amount from their Employees' Provident Fund (EPF) account, if he/she is facing financial problems due to the coronavirus-related lockdown. Further details can be found at: Click here https://champions.gov.in/Ministry-of-MSME/FaqspdfURL/Q53.pdf

Transport and Movement of Essential Goods

Q 45 . How can I apply for Curfew/Movement/Emergency Pass during COVID-19 lockdown?

Ans : To regulate the movement of goods and people during the COVID-19 lockdown period, advisory has been issued by many State Governments to procure 'curfew/e-passes' for vehicles and individuals. More details can be found at the respective websites of your states.

Q 46 . What all special provisions have been made for transportation of commodities during COVID -19 situation?

Ans : For nationwide transportation of essential commodities and other goods, Ministry of Railways has introduced unhindered services of Special Parcel Trains. The details of Parcel Special Trains can be found at https://enquiry.indianrail.gov.in/mntes/q?opt=TrainRunning&subOpt=splTrnDtl

Q 47 . Are there any guidelines available for movement of trucks/tankers carrying essential commodities from UT of J&K to Ladakh?

Ans : Standard Operating Procedures (SOPs) for movement of trucks/tankers carrying essential commodities from UT of J&K to Ladakh issued by the Office of the Divisional Commissioner, Ladakh can be found at https://champions.gov.in/MyMsme/FaqspdfURL/Q56.pdf

Industrial Regulations

Q 48 . In view of COVID-19 outbreak, what measures have been taken with respect to statutory and regularity compliances?

Ans : Finance Minister announces several relief measures relating to Statutory and Regulatory compliance matters across Sectors in view of COVID-19 outbreak including:
No Late Fees on any Filings made from 1st April 2020 to 30th September 2020 (irrespective of the due date of the filing)
Maximum Interval between two board meetings shall be extended by 60 days for the next two quarters. (Up to 30th September 2020).
Newly incorporated companies are required to file a declaration for Commencement of Business within 6 months of incorporation. An additional time of 6 more months shall be allowed.
Every Company is required to have at least one resident director. Such a requirement has been relaxed (Until further notice)
For more information on the measures taken, please visit the website of Ministry of Corporate Affairs or visit : https://champions.gov.in/MyMsme/FaqspdfURL/Q57.pdf

Skill Development

Q 49 . What is the support available for SkillDevelopment?

Ans : The Ministry conducts various types of training programme through its various organizations for self-employment as well as wage employment. The training programmes are primarily focused to promote self-employment in the country. Thus, all type of programmes have input which provide necessary information and skills to a trainee to enable him to establish his own micro or a small enterprise. The programmes include two-week Entrepreneurship Development Programme (EDP), Six Week Entrepreneurship Skill Development Programme (ESDP). One weak Management Development Programme (MDP), One Day Industrial Motivation Campaign (IMC) etc. For Monitoring of the programme a web-based system has been developed where coordinator of the programme is bound to feed all details of trainees including his photo and phone no. on the website. The same will be linked to the call center of Ministry where real time feedback is obtained from trainees. For further details please visit http://dcmsme.gov.in/Enterprise&skillDevelopment.htm .

Q 50 . What support is provided by the Ministry for assisting traininginstitutions?

Ans : The Ministry is implementing the Assisting to Training Institutions Scheme which envisages financial assistance for establishment of new institutions (EDIs), strengthening the infrastructure of the existing EDIs and for supporting entrepreneurship and skill development activities. The main objectives of the scheme are development of indigenous entrepreneurship from all walks of life for developing new micro and small enterprises, enlarging the entrepreneurial base and encouraging self-employment in rural as well as urban areas, by providing training to first generation entrepreneurs and assisting them in setting up of enterprises. The assistance shall be provided to these training institutions in the form of capital grant for creation/strengthening of infrastructure and programme support for conducting entrepreneurship development and skill development programmes.

MSME Schemes

Q 51 . What benefits do the MSME Technology Centres of Ministry of MSME provide to MSMEs?

Ans : MSME Technology Centres are equipped with state-of-the-art machinery & equipment. They are engaged in designing and manufacturing of quality tools, which are necessary for producing quality products and improve the competitiveness of MSMEs in national and international markets. They also conduct training programmes to provide skilled manpower to industries specially MSMEs. The placement of trainees trained in Tool Room is more than 90%. There are 18 Technology Centres under DC (MSME), a list of MSME Technology Centres and their details is available in the website http://dcmsme.gov.in/Toolroom_tdcs.htm .

Q 52 . What support is provided by the Ministry for improving manufacturing competitiveness?

Ans : To enhance the competitiveness amongst the MSMEs, there are six components for capacity building, technology upgradation, design interventions, products, IP rights to improve the productivity and handhold to deliver top quality productivity using lean technologies, to nurture ideas from professional beyond the traditional and to make MSME digitally powered under the umbrella program of Credit linked Capital subsidy Scheme and Technology Upgradation (CLS-TUS)
Lean Manufacturing Competitiveness Scheme for MSMEs: Financial assistance up to Rs. 36 lakh(Max. per mini cluster of 10 units, minimum 4 units for a period 10 months or till the completion)
Zero Defect and Zero Effect: Reimbursement for obtaining National and International standard certification
Digital MSME: Assistance is being provided for business solution software i.e ERP, etc. though e-platforms
Intellectual Property Rights: Reimbursement for registration of patent, trade mark, geographical indication (GI) are:
Domestic Patent: up to Rs. 1 lakh
Foreign Patent: up to TRs. 5 lakh
GI Registration: up to Rs. 2 lakh
Trademark: up to 0.10 lakh
Financial support up to 1.00 Cr. for setting up IP facilitation centres for a period of 5years.
Design Expertise to Manufacturing MSME Sector: Financial assistance to MSMEs for engagement of design consultants for design interventions (for the project range Rs. 15 lakhto Rs. 40 lakh)
Financial assistance of Rs. 1.5 lakh for final year student project done for MSMEs
Support for Entrepreneurs and Managerial Development of MSMEs through incubators: Financial support for untiring for developing of idea: maximum up to Rs. 15.00 lakh Details may be seen at http://www.dcmsme.gov.in/schemes/clcs-tus_scm.htm
The applicant may apply through online portal http://my.msme.gov.in .

Q 53 . Whether there is any scheme for assisting MSMEs for Intellectual Property Rights?

Ans : Under the National Manufacturing Competitiveness Programme (NMCP) to enhance the competitiveness of the SMEs sector, O/o DC (MSME) is implementing a scheme “Building Awareness on Intellectual Property Rights (IPR)” for the MSME. The objective of the scheme is to enhance awareness of MSME about Intellectual Property Rights (IPRs) to take measure for the protecting their ideas and business strategies Accordingly, to enable the MSME sector to face the present challenges of liberalization, various activities on IPR are being implemented under this scheme. For further details please visit http://my.msme.gov.in .

Q 54 . What is CLCSS?

Ans : Credit Linked Capital Subsidy Scheme (CLCSS) is for technology upgradation of Micro and Small enterprises (MSEs) in the country.

Q 55 . Whether the CLCSS is in operation at present?

Ans : The scheme is continued w.e.f.01.04.2017 and implemented as per pre-revised guidelines, the revised guidelines will be effective from 13.08.2019 and its amendments from time to time, the present validity of the CLCS Component of CLCSTU scheme is extended up to 31st March 2020. For more details please visit on the URL: http://dcmsme.gov.in/CLCS-TUS-Revised-Guidelines.pdf

Q 56 . When CLCSS was launched?

Ans : The Scheme was launched in the financial year 2000-2001.

Q 57 . What were the salient features of the CLCSS?

Ans : Under the scheme, 15 per cent capital subsidy, limited to maximum of Rs 15 lakh is provided to the eligible MSEs for upgrading their technology with the well-established and improved technology as approved under the scheme.

Q 58 . How many products/ sub-sectors have been approved under the CLCSS?

Ans : 51 products/sub-sectors have been approved under the CLCSS till date.

Q 59 . How can I get benefit under the Scheme?

Ans : If you are an MSE manufacturing a product and want to upgrade the technology of manufacturing the product with the well-established and improved technology as approved under the Scheme, the unit can approach to the nodal Banks/Agencies /Eligible financial institution for sanction of term loan for purchase of eligible machinery. The financial institutions /nodal banks/agency will sanction & recommend the subsidy eligible applicant to this office. To know more about this scheme, please follow the link http://dcmsme.gov.in/CLCS-TUS-Revised-Guidelines.pdf .

Q 60 . Which are the Nodal Agencies for implementation of CLCSS?

Ans : Small Industries Development Bank of India (SIDBI), National Bank for Agriculture and Rural Development (NABARD), Canara Bank, Bank of Baroda, Bank of India, The Tamilnadu Industrial Investment Corporation Limited, Chennai (TIICL), Andhra Bank, State Bank of India, Punjab National Bank, Corporation Bank and Indian Bank are the nodal Bank/Agencies for implementation of the CLCSS. Contact details for Nodal Banks/Agencies are available on the official website of this office link i.e. http://www.dcmsme.gov.in/schemes/Faqs.pdf

Q 61 . Whether the Scheme is applicable for new MSEs?

Ans : Yes.

Q 62 . Is CLCSS applicable for medium and large-scale Enterprises?

Ans : No, till date only Micro and Small-Scale Enterprises (MSEs) (existing & new) are eligible under CLCSS.

Q 63 . What are new steps will have been taken by the Ministry for effective implementation of CLCSS?

Ans : Management Information System (MIS) is being developed for online submission of application.

Q 64 . Is there any web-site where from I can get more details of the CLCSS?

Ans : Yes, “www.dcmsme.gov.in” under Technology Up- gradation - CLCSS.

Q 65 . What is the mechanism for disbursement of subsidy to the unit?

Ans : Subsidy is being released to the concerned Nodal bank/agency and subsidy is to be kept in the form of Term Deposit Receipt (TDR) for 3 years by bank after release by Office of DC (MSME) in the concerned unit account and interest amount on the term loan should be reduced accordingly. The beneficiary unit shall remain in commercial production for a period of at least three years after installation of eligible plant & machinery on which subsidy under CLCSS has been availed. If the unit fulfils the condition, the TDR will be transferred to unit's account after three years. Further, it is to clarify that there are two different conditions one is about the commercial production for a period of at least three years after installation of the eligible plant machinery on which subsidy under CLCSS has been availed and another is that Subsidy is to be kept in the form of TDR for 3 years. These two conditions and other conditions stipulated in the extant guidelines are to be fulfilled by the beneficiary/PLIs before release of subsidy in the beneficiary’s account.

Q 66 . What are the objectives of Procurement and Marketing Support scheme?

Ans : Procurement and Marketing Support scheme has following objectives:
To promote new market access initiatives like organizing / participation in National /International Trade Fairs / Exhibitions I MSME Expo etc.
To create awareness and educate the MSMEs on topics relevant for market access development.
To create more awareness about trade fairs, digital advertising, e-marketing, GST, GEM portal, Public Procurement policy and other related topics etc.
For more details: https://msme.gov.in/sites/default/files/Guidelines_PMS.pdf

Q 67 . What are the eligibility criteria of the PMS scheme?

Ans : Any Individual Manufacturing/Service MSEs registered at Udyog Aadhar Memorandum (UAM) portal.

Q 68 . Who is the implementing agency for the scheme?

Ans : The implementing agencies are:
Office of DC MSME through its field organizations namely MSME Development Institutes and Technology Centers.
Other field organizations of Ministry of MSME namely NSIC, KVIC, Coir Board.
State Governments through its department’s /organizations/ corporations/ autonomous bodies and agencies.
Other central Govt. Ministries through its departments /organizations / corporations /autonomous bodies and agencies.

Q 69 . What is the procedure to apply for the scheme?

Ans : Pl. refer https://my.msme.gov.in/MyMsme/Reg/COM_Matu.aspx

Q 70 . What are the components of the PMS schemes?

Ans : The components of the PMS scheme are mentioned below:
S. No. Scheme Components
A. Participation of individual MSEs in domestic trade fairs/ exhibitions
B. Organizing Domestic Trade Fairs/ Exhibition and participation in trade fairs / exhibitions by the Ministry / Office of DC (MSME) / Government organizations
C. Capacity building of MSMEsin modern packaging technique
D. Development of Marketing Haats
E. Vendor Development Programmes
F. International/National Workshops/Seminars
G. Awareness Programs

Under each scheme component, eligible items and the scale of assistance are defined. It can be accessed at: https://msme.gov.in/sites/default/files/Guidelines_PMS.pdf

Q 71 . What support is provided by the Ministry for participation of MSMEs in international events?

Ans : Under the International Cooperation Scheme, financial assistance is provided on reimbursement basis to the State/Central Government organizations, industries/enterprises Associations and registered societies/trusts and organizations associated with MSME for deputation of MSME business delegation to other countries for exploring new areas of MSMEs, participation by Indian MSMEs in international exhibitions, trade fairs, buyer seller meet and for holding international conference and seminars which are in the interest of MSME sectors. Eligible beneficiary organizations can apply to the Ministry directly to avail the assistance under IC Scheme as per Scheme Guidelines. For further details please visit http://www.dcmsme.gov.in .

Q 72 . Who can apply under this scheme

Ans : Government Institutions and Registered Industry Associations associated with promotion and development of MSME sector.

Q 73 . How to apply under this scheme?

Ans : Applications for financial assistance can be sent in the prescribed form to the Director (International Cooperation), Ministry of MSME, Udyog Bhawan, New Delhi-110011. The detailed guidelines of International Cooperation Scheme including application form and claim form are available on the website of the Ministry namely https://my.msme.gov.in .

Q 74 . What is Cluster?

Ans : A cluster is a group of enterprises located within an identifiable and as far as practicable, contiguous area or a value chain that goes beyond a geographical area and producing same/similar products/complementary products/services, which can be linked together by common physical infrastructure facilities that help address their common challenges. The essential characteristics of enterprises in a cluster are (a) Similarity or complementarity in the methods of production, quality control & testing, energy consumption, pollution control, etc., (b) Similar level of technology & marketing strategies/practices, (c) Similar channels for communication among the members of the cluster, (d) Common market & skill needs and/or (e) Common challenges & opportunities that the cluster faces.

Q 75 . What is MSE-CDP?

Ans : Micro & Small Enterprises - Cluster Development Programme (MSE-CDP), MSE-CDP approach as a key strategy for enhancing the productivity and competitiveness as well as capacity building of Micro and Small Enterprises (MSEs) and their collectives in the country.

Q 76 . What are the objectives of MSE-CDP?

Ans : Following are objectives offset-CDP:
To support the sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills & quality, market access, etc.
To build capacity of MSEs for common supportive action through formation of self-help groups, consortia, upgradation of associations, etc.
To create/upgrade infrastructural facilities in the new/existing Industrial Areas/Clusters of MSEs.
To set up Common Facility Centers (for testing, training, raw material depot, effluent treatment, complementing production processes, etc.).
Promotion of green & sustainable manufacturing technology for the clusters to enable units switch to sustainable and green production processes and products.

Q 77 . Which are the components covered under MSE-CDP?

Ans : Following are the components for which GoI assistance is provided under MSE-CDP:
Setting up of Common Facility Centers (Common Production/Processing Centre, Design Centre, Testing Centre etc.).
Creation/upgradation of infrastructural facilities in the new/existing industrial areas/ clusters of MSEs.
Establishing Marketing Hubs/Exhibition Centers at central places for display and sale of products of Micro and Small Enterprises.
Implementation of Thematic Interventions in approved/completed CFCs for following activities:
Training Programs
Exposure Visits.
Strengthening the Business Development Service (BDS) provision through a panel of service providers.
Any other activity related to creating business eco-system in clusters
Support to State Innovative Cluster Development Programme, this component would provide co-funding of the CFC projects of State Cluster Development Programme on matching share basis.
For further details please visit http://www.dcmsme.gov.in/MSE-CDProg.htm .

Q 78 . How many items are reserved for exclusive purchase from MSEs?

Ans : There are 358 items reserved for exclusive purchase from MSE Sector.

Public Procurement Policy

Q 79 . Whether this policy is applicable for works / trading activities also?

Ans : Policy is meant for procurement of only goods produced and services rendered by MSEs. However, traders are excluded from the purview of Public Procurement Policy.

Q 80 . Whether policy is applicable for MSEs registered with NSIC?

Ans : The policy is also applicable for MSEs registered with NSIC.

Q 81 . Whether policy provides benefits for exemption from Security Deposits to MSEs?

Ans : No, there is no exemption on security deposit/performance guaranty under the PPP.

Q 82 . 106 Whether MSE quoting price within price band L1 + 15 % could be given complete supply to tender in case tender item is non-splitable / non-dividable?

Ans : In case of tender item is non-splitable or non-dividable, etc. MSE quoting price within price band L1+15% may be awarded for full/ complete supply of total tendered value to MSE, considering spirit of policy for enhancing the Govt. procurement from MSE .

Q 83 . Which are MSEs owned by SC / ST enterprises?

Ans : Definition of MSEs owned by SC / ST is as given under:
In case of proprietary MSE, proprietor(s) shall be SC /ST.
In case of partnership MSE, the SC / ST partners shall be holding at least 51% shares in the unit.
In case of Private Limited Companies, at least 51% share shall be held by SC / ST promoters.

Q 84 . Whether Government Ministries / Departments / CPSUs those have meager value of total procurement may be exempted from policy?

Ans : Policy is applicable to all the Govt. Ministries / Departments / CPSUs in irrespective of volume and nature of procurement.

Q 85 . Whether policy has provision for exemption from 20% percentage procurement target?

Ans : The Review Committee may consider any request of Ministries / Departments / CPSUs for exemption from present25%procurement targets on case to case basis.

Q 86 . What is the share of procurement from MSEs out of the total procurement made by Central Government Ministries / Departments / Public Sector Undertakings?

Ans : Under amended Public Procurement Policy for MSEs, order 2012 a minimum 25 per cent share out of the total procurement by Central Government Ministries / Departments /Central Public Sector Undertakings are to be made from MSEs.

Q 87 . Whether there is any reservation for MSEs owned by SC/ST entrepreneurs?

Ans : Yes, out of 25% target of annual procurement from MSEs, a sub-target of 4% is earmarked for procurement from MSEs owned by Scheduled Caste (SC) / Scheduled Tribe (ST) entrepreneurs and 3%from MSEs owned by women entrepreneur. However, in event of failure of such MSEs to participate in tender process or meet tender requirements and L1 price, 4% sub-target for procurement earmarked for MSEs owned by SC/ST entrepreneurs and 3% earmarked to women entrepreneur will be met from other MSEs.

Q 88 . Who is eligible for availing benefits under the Public Procurement Policy?

Ans : The MSEs who are registered with District Industries Centers (DICs) / Khadi & Village Industries Commission (KVIC) / Khadi & Village Industries Board (KVIB) / Coir Board / NSIC / Directorate ofHandicrafts and Handloom or having Udyog Aadhaar Memorandum (UAM) or registered with any other body specified by Ministry of Micro, Small& Medium Enterprises (M/o MSME) areeligible for availing benefitsunder the Public Procurement Policy.

Q 89 . What is the date of implementation of this Policy?

Ans : The policy is applicable with effect from 1.4.2012. However, the policy has become mandatory with effect from 1.4.2015 onwards.

Q 90 . Whether Policy is transparent, competitive and cost effective?

Ans : The Policy rests upon core principles of competitiveness, adhering to sound procurement practices and execution of orders for supply of goods and services in accordance with a system which is fair, equitable, transparent, competitive and cost effective.

Q 91 . Whether Policy is transparent, competitive and cost effective?

Ans : The Policy rests upon core principles of competitiveness, adhering to sound procurement practices and execution of orders for supply of goods and services in accordance with a system which is fair, equitable, transparent, competitive and cost effective.

Q 92 . Whether the Policy is implemented in parts or fully from its inception?

Ans : As per Gazette Notification(S.O. 5670(E)dated 8th November,2018, It is mandatory for all CPSEs to procure at least 25% of their annual procurement from MSEs including 4% from MSEs owned by SC/ST entrepreneur and 3% from MSEs owned by women entrepreneur.

Q 93 . Whether there is any monitoring system for assessing the Government procurement from MSEs?

Ans : In tender, participating MSEs quoting price within band of L1+15% shall also be allowed to supply a portion of requirement by bringing down their price to L1 price in a situation where L1 price is from someone other than an MSE. Such MSEs shall be allowed to supply at least 25% of total tendered value. In case of more than one such MSE, the supply will be shared proportionately (to tendered quantity).

Q 94 . Whether there is price match making facility for procurement from MSEs over large scale?

Ans : In tender, participating MSEs quoting price within band of L1+15% shall also be allowed to supply a portion of requirement by bringing down their price to L1 price in a situation where L1 price is from someone other than an MSE. Such MSEs shall be allowed to supply up to 20% of total tendered value. In case of more than one such MSE, the supply will be shared proportionately (to tendered quantity).

Q 95 . What steps are to be taken by the Government Ministries / Departments / CPSUs to develop MSE Vendors to achieve their targets for MSE procurement?

Ans : Central Ministries /Departments /PSUs must take necessary steps todevelop appropriate vendors by organizing Vendor Development Programmes / Buyer-Seller Meets and entering into Rate Contract withMSEs for a specified period in respect of periodic requirements.

Under the Procurement and Marketing Support scheme, State Level VDP and National Level VDPs are regularly organized by the Ministry to develop suitable MSE vendors.

Q 96 . What steps are to be taken by the Government Ministries / Departments / CPSUs to develop vendors from MSEs owned by SC/ST entrepreneurs?

Ans : For enhancing participation of MSEs owned by SCs / STs in Government procurement, Central Government Ministries / Departments / PSUs have to take following steps:
Special Vendor Development Programmes/ Buyer-Seller Meets would be conducted by Departments/ CPSUs for SC/STs;
Outreach programmes will be conducted by NSIC to cover more and more MSEs from SC/STs under its schemes of consortia formation; and
NSIC would open a special window for SCs / STs under its Single Point
Registration Scheme (SPRS).
A National SC/ST hub scheme has been launched in October 2016, for providing handholding support to SC/ST entrepreneur. which is being coordinated / implemented by the National Small Industries Corporation (NSIC) under this Ministry

Q 97 . What are the other benefits/ facilities to the MSEs available under the Policy?

Ans : To reduce transaction cost of doing business, MSEs will be facilitated by providing them tender sets free of cost, exempting MSEs from payment of earnest money, adopting e-procurement to bring in transparency in tendering process.
In addition to benefits mention above MSEs are also given relaxation in prior turn over and prior experience criteria without compromising in quality and technical specification of products or services.

Q 98 . Whether there is any review mechanism for monitoring and review of the Policy?

Ans : A Review Committee has been constituted under chairmanship of Secretary, Ministry of MSME for monitoring and review of Public Procurement Policy for MSEs. M/o MSME will review and/or modify the composition of the Committee as and when required. This Committee will, inter alia, review list of 358 items reserved for exclusive purchase from MSEs on a continuous basis, consider requests from Government Departments, CPSUs for exemption from 25% target on a case to case basis and monitor achievements under the Policy.

Q 99 . Whether there is any kind of purchases that have been kept out of the purview of the Procurements under the Policy and if yes, how monitoring of the goal set will be done?

Ans : Given their unique nature, Defense armament imports will not be included in computing 25% goal for Ministry of Defense. In addition, Defense Equipment like weapon systems, missiles, etc. will remain out of purview of such policy of reservation. Monitoring of goals set under the policy will be done, in so far as they relate to the Defense sector, by Ministry of Defense itself in accordance with suitable procedures to be established by them.

Q 100 . From where the detail of the Policy can be obtained?

Ans : Policy details are available on the website of this office- http://dcmsme.gov.in.

Q 101 . Whether this Policy is mandatory under any Act?

Ans : Yes, The Policy is mandatory and notified under the MSMED Act,2006.

Delayed Payment

Q 102 . What is MSME Samadhaan Portal?

Ans : MSME Samadhaan is a Portal created by Office of DC(MSME), Ministry of Micro, Small and Medium Enterprises (MSME) where Micro and Small Enterprises (MSEs) can file their applications online regarding delayed payments portal https://samadhaan.msme.gov.in/MyMsme/MSEFC/COM_MSEFC_EntLogin.aspx.

Q 103 . Do Ministry of MSME take action on applications filed on MSME Samadhaan Portal?

Ans : No, MSME SAMADHAAN online portal is developed by Ministry of MSME only to facilitate MSEs filing of their applications regarding delayed payments online. The application once filed is forwarded automatically online to the concerned Micro and Small Enterprise Facilitation Council (MSEFC) established by the State/UTs as per the provisions of MSMED-Act 2006. Action on the applications regarding delayed payment is taken by the concerned MSEFC only.

Q 104 . Can Ministry of MSME intervene in matters of MSEFC.

Ans : No. Only the MSEFCs have been empowered as per MSMED Act, 2006 for taking decisions regarding its reference made with them. This office does not intervene in the matters of MSEFC. In short Ministry of MSME cannot interfere with judicial functioning of MSEFC.

Q 105 . Is filing of Udyog Aadhaar Memorandum (UAM) Mandatory to file applications on MSME Samadhaan Portal?

Ans : Yes, UAM is mandatory to file applications online on MSME Samadhaan Portal.

Q 106 . How can I get Udyog Aadhaar Memorandum (UAM) Number?

Ans : Registration for Udyog Aadhaar can be done online on the official website of Ministry of MSME free of cost at following address – https://udyogaadhaar.gov.in.

Q 107 . Is it mandatory to file Delayed Payment Applications online on MSME Samadhaan Portal only?

Ans : No. MSME Samadhaan Portal has been created only to facilitate online applications regarding delayed payments. Physical applications can also be filed at the concerned MSEFC.

Q 108 . Who can convert the application into Regular Reference Petition/claim case?

Ans : The applications are converted into case by the concerned MSEFC.

Q 109 . If there is no action on an application filed by MSEs, whom to contact?

Ans : After submission, the application is automatically forwarded online to concerned MSEFC. Therefore, concerned MSEFC is to be contacted after filing the application online on MSME Samadhaan Portal. The contact address of concerned MSEFC is mentioned on the acknowledgement sent on the registered email of the applicant.

Q 110 . Is work order compulsory to file application on MSME Samadhaan Portal?

Ans : Yes, work order is compulsory. In case purchase order is oral an affidavit to that effect is to be submitted.

Q 111 . How to upload multiple invoices?

Ans : Multiple invoices can be combined into single PDF and can be uploaded. The affidavit of oral purchase order is to be included in single PDF.

Finance

Q 112 . What relief measures RBI has taken for MSMEs during COVID-19 pandemic?

Ans : To mitigate the impact on this vital sector, the Reserve Bank of India (RBI), Ministry of Finance, GoI has announced set of relief measures on March 27, 2020. A second set of measures was also announced on April 17, 2020. For more information on these measures, please visit the website of RBI: Click here ;https://champions.gov.in/MyMsme/FaqspdfURL/Q14.pdf

Q 113 . What is the Credit Guarantee Scheme for MSEs (CGTMSE)?

Ans : The Ministry of MSME, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) with a view to facilitate flow of credit to the MSE sector without the need for collaterals / third party guarantees. The main objective of the scheme is that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed. The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSE unit, which availed collateral - free credit facilities, failing to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 85 per cent of the outstanding amount in default.
The CGTMSE would provide cover for credit facility up to Rs. 200 lakh which have been extended by lending institutions without any collateral security and /or third-party guarantees. A guarantee and annual service fee is charged by the CGTMSE to avail of the guarantee cover. For more details you may visit www.cgtmse.in.

Q 114 . What is Trade Receivables Discounting System (TReDS)?

Ans : The objective of TReDS is to create Electronic Bill Factoring Exchanges which could electronically accept and settle bills so that MSMEs could encash their receivables without delay. This will not only give them greater access to finance but will also put greater discipline on corporates to pay their dues on time. For more details you may refer to RBI guidelines for setting up and operating TReDS on their website https://www.m1xchange.com/treds.php.

Q 115 . Who are the participants in TReDS?

Ans : Sellers, buyers and financiers are the participants on a TReDS platform.

Q 116 . Who can participate as a seller in TReDS?

Ans : Only MSMEs can participate as sellers in TReDS.

Q 117 . Who can participate as a buyer in TReDS?

Ans : Corporates, Government Departments, PSUs and any other entity can participate as buyers in TReDS.

Q 118 . Who can participate as a financier in TReDS?

Ans : Broadly, following steps take place during financing / discounting through TReDS:
Creation of a Factoring Unit (FU) - standard nomenclature used in TReDS for invoice(s) or bill(s) of exchange - containing details of invoices / bills of exchange (evidencing sale of goods / services by the MSME sellers to the buyers) on TReDS platform by the MSME seller (in case of factoring) or the buyer (in case of reverse factoring);
Acceptance of the FU by the counterparty - buyer or the seller, as the case may be;
Bidding by financiers;
Selection of best bid by the seller or the buyer, as the case may be;
Payment made by the financier (of the selected bid) to the MSME seller at the agreed rate of financing / discounting;
Payment by the buyer to the financier on the due date.

Q 119 . What is a Factoring Unit (FU)?

Ans : A Factoring Unit (FU) is a standard nomenclature used in TReDS for invoice(s) or bill(s) of exchange. Each FU represents a confirmed obligation of the corporates or other buyers, including Government Departments and PSUs.

Q 120 . Who can create a FU?

Ans : In TReDS, FU can be created either by the MSME seller or the buyer. If MSME seller creates it, the process is called factoring; if the same is created by corporates or other buyers, it is called as reverse factoring.

Q 121 . Whether TReDS could deal with reverse factoring?

Ans : Yes. The TReDS could deal with both receivables factoring as well as reverse factoring.

Q 122 . Whether the MSME seller would have to pay to the financier in case the buyer defaults in repayment?

Ans : No. The transactions processed under TReDS are “without recourse” to the MSMEs.

Q 123 . Whether any authorization is required to set up and operate a TReDS platform?

Ans : Yes, authorization is required to be obtained from RBI under the Payment and Settlement Systems (PSS) Act, 2007.

Q 124 . What is the eligibility criteria for setting up and operating TReDS?

Ans : Eligibility criteria for the purpose of setting up and operating a TReDS platform is provided in the guidelines (as amended from time to time) for TReDS issued by RBI. These guidelines are available at the following path: www.rbi.org.in →“Payment and Settlement Systems” dropdown →“Guidelines”. RBI’s Press Release dated October 15, 2019 may also be read in this regard. The same can be accessed at the following web links: https://champions.gov.in/MyMsme/FaqspdfURL/Q27_1.pdf and https://champions.gov.in/MyMsme/FaqspdfURL/Q27_2.pdf

Q 125 . Are all sick units put under rehabilitation bybanks?

Ans : No. If a sick unit is found potentially viable it can be rehabilitated by the banks. The viability of the unit is decided by banks. A unit should be declared unviable only if such a status is evidenced by a viability study.

Q 126 . What is the definition of a sickunit?

Ans : As per the extant guidelines, a Micro or Small Enterprise (as defined in the MSMED Act 2006) may be said to have become Sick, if – Any of the borrower account of the enterprise remains NPA for three months or more OR There is erosion in the net worth due to accumulated losses to the extent of 50% of its net worth during the previous accounting year. This criterion enables banks to detect sickness at an early stage and facilitate corrective action for revival of the unit.

Q 127 . Whether defaults on TReDS platform are the responsibility of TReDS entities?

Ans : No. Default handling is outside the purview of TReDS platforms.

Q 128 . What is a settlement file and who generates it in TReDS?

Ans : A settlement file provides information as to how much amount has to be debited from and credited to the accounts of participants (sellers, buyers and financiers), due on a date / time. In other words, it indicates how much a financier has to pay to an MSME seller, and how much a buyer owes to the financier on a date / time. The TReDS entities generate the settlement file and send the same to existing payment systems (for instance, National Automated Clearing House) for actual payment of funds.

Q 129 . Whether TReDS entities undertake KYC (Know Your Customer) of participants?

Ans : Yes. The KYC process adopted by the TReDS entities shall adhere to the “Master Direction – Know Your Customer (KYC) Direction, 2016” dated February 25, 2016 (as amended from time to time) issued by RBI.

Q 130 . Where can I find the details of TReDS entities authorised by RBI?

Ans : List of all authorized Payment System Operators (PSOs), including TReDS, is available at the following path: www.rbi.org.in →“Payment and Settlement Systems” dropdown →“Information Useful to Customer”→“List of Authorised Entities – Payment System Operators”. Following is the web link for accessing the same: https://champions.gov.in/MyMsme/FaqspdfURL/Q28.pdf

Emergency Credit Line Guarantee Scheme of Rs. 3 lakh crore

Q 131 . What is Guaranteed Emergency Credit Line (GECL)?

Ans : The GECL is a loan for which 100% guarantee would be provided by National Credit Guarantee Trustee Company (NCGTC) to Member Lending Institutions (MLIs), and which will be extended in the form of additional working capital term loan facility in case of Scheduled Commercial Banks (SCBs) and Financial Institutions (FIs), and additional term loan facility in case of Non-Banking Financial Companies (NBFCs), to eligible MSMEs/ Business Enterprises and interested Pradhan Mantri Mudra Yojana (PMMY) borrowers. Credit under GECL would be up to 20% of the borrower’s total outstanding credit up to Rs. 25 crore, excluding off-balance sheet and non-fund based exposures, as on 29th February, 2020, i.e., additional credit shall be up to Rs. 5 crore.

Q 132 . What is the objective of the Scheme?

Ans : The Scheme is a specific response to the unprecedented situation COVID-19. It seeks to provide much needed relief to the MSME sector by incentivizing MLIs to provide additional credit of up to Rs. 3 lakh crore at low cost, thereby enabling MSMEs to meet their operational liabilities and restart their businesses.

Q 133 . What is the Emergency Credit Line Guarantee Scheme?

Ans : The Emergency Credit Line Guarantee Scheme provides 100% guarantee coverage by NCGTC to MLIs on GECL of up to Rs. 3 lakh crore to eligible MSMEs. MSMEs for the purpose of this Scheme will include MSMEs/ Business Enterprises which are constituted as Proprietorships, Partnerships, Registered Companies, Trusts and Limited Liability Partnerships (LLPs), and also interested borrowers under PMMY.

Q 134 . Who are the MLIs under the Scheme?

Ans : All SCBs are eligible as MLIs. NBFCs which have been in operation for at least 2 years as on 29.2.2020, and FIs will also be eligible as MLIs under the Scheme.

Q 135 . What will be the definition of FIs for the purpose of this Scheme?

Ans : FIs for the purpose of this Scheme will be as defined under sub-clause (i) of clause (c) of Section 45-I of RBI Act.

Q 136 . What is the duration of the Scheme?

Ans : The Scheme would be applicable to all loans sanctioned under GECL during the period from May 23, 2020 to 31st October 2020, or till an amount of Rs. 3 lakh crore is sanctioned under GECL, whichever is earlier.

Q 137 . What would be the guarantee coverage under the Scheme?

Ans : The entire funding provided under GECL shall be provided with a 100% credit guarantee coverage by NCGTC under the Scheme.

Q 138 . What will be the eligibility criteria for MSMEs to avail the benefit of the Scheme?

Ans : The eligibility criteria under the Scheme are as under:
• All MSME borrower accounts with combined outstanding loans across all MLIs of up to Rs. 25 crore as on 29.2.2020, and annual turnover of up to Rs. 100 crore in FY 2019-20. In case accounts for FY 2019-20 are yet to be audited/finalized, the MLI may rely upon the borrower’s declaration of turnover.
• The Scheme is valid only for existing customers on the books of the MLI. Borrower accounts should be classified as regular, SMA-0 or SMA-1 as on 29.2.2020. Accounts classified as NPA or SMA-2 as on 29.2.2020 will not be eligible under the Scheme.
• The MSME borrower must be GST registered in all cases where such registration is mandatory
• This condition will not apply to MSMEs that are not required to obtain GST registration. • Loans provided in individual capacity will not be covered under the Scheme.

Q 139 . Will the Scheme also cover borrowers under PMMY?

Ans : Yes, loans under PMMY extended on or before 29.2.2020, and reported on the MUDRA portal shall be covered under the Scheme.

Q 140 . Will GECL be extended as a separate loan account, or as part of the existing loan account of the borrower?

Ans : A separate loan account shall be opened for the borrower for extending additional credit under GECL. This account will be distinct from the existing loan account(s) of the borrower

Q 141 . Will loans under the Scheme be automatically given without any application or solicitation from the borrower?

Ans : This is a pre-approved loan. An offer will go out from the MLI to the eligible borrowers for a preapproved loan which the borrower may choose to accept. If the MSME accepts the offer, it will be required to complete requisite documentation. Thus, an ‘opt-out’ option will be provided to eligible borrowers under the Scheme, i.e., if the borrower is not interested in availing the loan, he/she may indicate accordingly.

Q 142 . What would be the procedure followed in case a borrower has loan accounts with multiple lenders?

Ans : In case a borrower has existing limits with multiple lenders, GECL may be availed either through one lender or each of the current lenders in proportion depending upon the agreement between the borrower and the MLI.
• In case the borrower wishes to take from any lender an amount more than the proportional 20% of the outstanding credit that the borrower has with that particular lender, a No Objection Certificate (NOC) would be required from all other lenders.
• No NOC will, however, be required if the GECL availed from a particular lender is limited to the proportional 20% of the outstanding credit that the borrower has with that lender.

Q 143 . What would be the procedure followed in case a borrower has loan accounts with multiple lenders?

Ans : No.

Q 144 . To avail GECL, will it be necessary for existing loans of the borrower to be covered under existing guarantee schemes such as CGFMU or CGTMSE?

Ans : Yes, interest rates on GECL shall be capped as under:
• For Banks and FIs, one of the RBI prescribed external benchmark linked rates +1% subject to a maximum of 9.25% per annum
• For NBFCs, the interest rate on GECL shall not exceed 14% per annum
The Scheme may also be operated in combination with applicable interest subvention schemes, as far as feasible.

Q 145 . What would be the tenor of loans provided under GECL?

Ans : The tenor of loans provided under GECL shall be four years from the date of disbursement. No pre-payment penalty shall, however, be charged by the MLIs in case of early repayment.

Q 146 . Is there any moratorium period prescribed under the Scheme?

Ans : Yes, a moratorium period of one year on the principal amount shall be provided for GECL funding. Interest shall, however, be payable during the moratorium period. The principal shall be repaid in 36 instalments after the moratorium period is over.

Q 147 . Is any turnaround time prescribed for MLIs under the Scheme for sanction of GECL?

Ans : Indicative turnaround time for loans under the Scheme shall be the same as those prescribed by Department of Financial Services for credit support in the context of COVID-19 pandemic.

Q 148 . Will any guarantee fee be charged under the Scheme by NCGTC?

Ans : No, NCGTC will not charge any guarantee fee under the Scheme

Q 149 . Will any processing fee be charged by MLIs for sanction of loans under GECL?

Ans : Since additional credit under GECL is to be provided to existing customers, no additional processing fee shall be charged by lenders.

Q 150 . Will MLIs ask for any additional collateral for the GECL facility?

Ans : No additional collateral shall be asked by MLIs for additional credit extended under GECL.

Q 151 . Will the categorization of existing loans extended through current Government schemes such as PMEGP or PMMY change if GECL is provided to such borrowers?

Ans : No. Existing loans extended through current Government schemes would continue to be categorized under that scheme as earlier. GECL under this Scheme shall be over and above the existing loan.

Q 152 . What will be the risk weight assigned to the credit extended under GECL?

Ans : Approval of RBI has been requested for assigning zero risk weight to the credit extended under GECL.

Q 153 . What will be the security on credit extended under GECL? Scheme?

Ans : The credit under GECL will rank second charge with the existing credit facilities in terms of cash flows (including repayments) and securities, with charge on the assets financed under the Scheme to be created within a period of 3 months from the date of disbursal.

Q 154 . Will MLIs be required to enter into any agreement with NCGTC for the purpose of this Scheme?

Ans : Yes, MLIs will be required to submit an Undertaking to NCGTC for the purpose of this Scheme

Q 155 . How will the guaranteed amount be paid by NCGTC to the MLIs on invocation of the guarantee?

Ans : 75% of the guaranteed amount will be paid by NCGTC within 30 days of an eligible claim being preferred by the MLI concerned. The balance 25% will be paid on conclusion of recovery proceedings or till the decree gets time barred, whichever is earlier.

Q 156 . Who will issue detailed operational guidelines for ECLGS, and who will have the authority to modify provisions of the Scheme/operational guidelines?

Ans : NCGTC has issued the detailed operational guidelines for the Scheme. The Management Committee for ECLGS fund will have the authority to approve any changes to the current structure of the Scheme/ operational guidelines.

Q 157 . I run a business enterprise and have a GST registration. However, I am not registered as an MSME nor do I have Udyog Aadhar. My Bank also does not classify me as an MSME borrower. Am I eligible under the scheme?

Ans : You are eligible if:
(i) you have total credit outstanding of Rs. 25 Crore or less as on 29th Feb 2020
(ii) Your turnover for 2019-20 was up-to Rs. 100 Cr.
(iii) You have a GST registration or were not required to obtain such GST registration Udyog Aadhar or recognition as MSME is not required under this Scheme

Q 158 . My Bank/ NBFC has offered me a pre-approved loan of 15% only though the scheme mentions 20%. Can the Bank/ NBFC do so?

Ans : Under ECLGS, Banks/ NBFCs are to offer loans up-to 20%. Actual loan extended can therefore be less than 20%. This is generally on mutually agreed terms between the borrower and the lender based on factors relevant to the business operations.

Q 159 . I operate a lending business. Am I eligible?

Ans : No please. Typically, lending institutions get funds from banks/ NBFCs through on lending, refinance, asset purchase, securitization, assignment etc. There are therefore other windows available including the Partial Credit Guarantee Scheme and the Special Liquidity Facility

Q 160 . Are all NBFCs eligible to become MLIs with NCGTC?

Ans : No. The NBFC must be registered with RBI, should be meeting the CRAR requirements prescribed by RBI and have been in lending business for at least two years as on 29th Feb 2020. The Managing Committee of the Scheme may prescribe additional qualification criteria from time to time.

Q 161 . What will be the procedure for claim settlement?

Ans : This will be advised in due course through additional guidelines to be issued.

Q 162 . Can new MSME borrowers get covered under the scheme?

Ans : ECLGS scheme is only for existing borrowers on the books of the banks as on 29th Feb 2020. Any New borrowers should be covered under ongoing CGTMSE and NCGTC schemes

Q 163 . Can co-applicant loans between entity and the promoter or director get covered under the scheme?

Ans : For loans having co-applicant, only those existing loans where entity is the primary co-applicant are covered under the Scheme for additional emergency funding

Q 164 . Are off balance sheet loans provided to MSME borrowers covered as part of the scheme?

Ans : No, the scheme does not cover the off-balance sheet exposure. Only on balance sheet exposures outstanding as on 29th Feb, 2020 are eligible to be covered under the scheme.

Q 165 . How is the interest rate to be decided for loans under the scheme?