What is Credit Guarantee Scheme for Subordinate Debt (CGSSD)?

Question

Asked: October 11, 20212021-10-11T19:50:37+05:30 2021-10-11T19:50:37+05:30In: Law

[Deleted User] · Answer 1 · 2021-10-11T20:02:12+05:30

Context:

The Government has proposed a scheme of Mega Investment Textiles Parks (MITRA).

This will create world class infrastructure with plug and play facilities to enable create global champions in exports.
MITRA will be launched in addition to the Production Linked Incentive Scheme(PLI). MITRA) will be signifi cant for the Indian Textiles Industry.
Along with the Production Linked Incentive (PLI) scheme, MITRA will lead to increased investments and enhanced employment opportunities.
Emphasis on state-ofthe-art infrastructure through MITRA will give our domestic manufacturers a levelplaying fi eld in the international textiles market.
It will pave the way for India to become a global champion of textiles exports across all segments.

[Deleted User] · Answer 2 · 2021-10-11T19:56:04+05:30

The government launched Rs 20,000-crore ‘Credit Guarantee Scheme for Subordinate Debt (CGSSD)’ to support distressed small businesses.

Under the Credit Guarantee Scheme for Subordinate Debt (CGSSD), the government provides a subordinate debt facility to the promoters of micro, small and medium enterprises that are either distressed or classifi ed under non-performing assets.
In case of default, creditors giving subordinate debt are paid after primary debt is settled in full.
The scheme will be operationalised through the Credit Guarantee Fund Trust for MSEs (CGTMSE).

Promoter(s) of MSMEs meeting the eligibility criteria may approach any scheduled commercial banks to avail benefi t under the scheme.
They will be given credit equal to 15% of their stake (equity plus debt) or Rs. 75 lakh whichever is lower.
Promoters in turn will infuse this amount in the MSME unit as equity and thereby enhance the liquidity and maintain debt-equity ratio.
90 percent guarantee coverage for this sub-debt will be given under the Scheme and 10 percent would come from the concerned promoters.
There will be a moratorium of 7 years on payment of principal whereas maximum tenor for repayment will be 10 years.