Ministry of MSME launches Credit Guarantee Scheme for Sub-ordinate Debt (CGSSD)

The Credit Guarantee Scheme for Sub-ordinate Debt (CGSSD) has been launched by Ministry of Micro, Small & Medium Enterprises. The Scheme will provide Rs. 20,000 crore of guarantee cover to two lakh MSMEs.
The scheme is also called “Distressed Assets Fund–Sub-ordinate Debt for MSMEs”. Guarantee cover worth Rs. 20,000 crores will be provided to the promoters who can take debt from the banks to further invest in their stressed MSMEs as equity.
Promoter(s) of the MSMEs will be given credit equal to 15% of their stake (equity plus debt) or Rs. 75 lakh whichever is lower.
90% guarantee coverage for this sub-debt will be given under the Scheme and 10% would come from the concerned promoters
Moratorium and Repayment Period: There will be a moratorium of 7 years on payment of principal whereas maximum tenor for repayment will be 10 years.
The scheme will be operationalised through Credit Guarantee Fund Trust for MSEs (CGTMSE).