17th June 2021

The Managing Directors/CEO's/Owners/Director/Partners/General Managers             
All FHRAI Members                

CC:      All Members of the Executive Committee       
             All Regional Associations         

SUB: CREDIT GUARANTEE SCHEME FOR SUBORDINATE DEBT – A  CREDIT FACILITY FOR THE  STRESSED MSMEs

Dear Member,

This is to inform you that the Credit Guarantee Scheme for Subordinate Debt was  launched by the Minsitry of MSME on 24th June 2020 with the purpose of providing guarantees in respect of credit facilities extended by eligible and registered scheduled commercial banks to borrowers in Micro, Small and Medium Enterprises (MSMEs). The scheme is being  operationalized through a special window created for this purpose under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

Purpose of the Scheme is  to provide guarantee coverage for the CGSSD to provide Sub-Debt support in respect of restructuring of MSMEs. 90% guarantee coverage would come from scheme/ Trust and remaining 10% from the concerned promoter(s). The objective of the scheme is to provide personal loan through banks to the promoters of stressed MSMEs for infusion as equity / quasi equity in the business eligible for restructuring, as per RBI guidelines for restructuring of stressed MSME advances.

Under this Scheme, the functioning MSMEs which are NPA or are stressed were eligible. The Promoters of the MSME were given debt by banks, which will then be infused by promoter as equity in the Unit.

The scheme was initially applicable till 31st March 2021. It was further extended till 30th September 2021.

This is another credit facility available to the establishments that are stressed due to Covid -19.

Relevant documents about the scheme are enclosed for your kind reference.

With regards,

Jaison Chacko
Secretary General
_____________________________________________________
The Federation of Hotel & Restaurant Associations of India
Regd. Off.: B-82, 8th Floor, Himalaya House, 23 K.G. Marg, New Delhi - 110 001\
Tel.: 011-40780780, Email: fhrai@fhrai.com, Website: www.fhrai.com