Subordinate debt provision for MSMEs

Recognising the constraints faced by MSMEs in terms of working capital credit, the government has introduced a scheme to provide subordinate debt for entrepreneurs of MSMEs in Union Budget 2020. This subordinate debt will be given by banks, considered as quasi-equity and completely guaranteed through the Credit Guarantee Trust for Medium and Small Entrepreneurs (CGTMSE). The government will augment the corpus of the CGTMSE. Over 5 lakh MSMEs have benefited from restructuring of debt that was allowed by RBI last year. The government has extended this window from March 31, 2020 to March 31, 2021. To ease compliance burden on small retailers, traders and shopkeepers, the government has also proposed to raise the turnover threshold for audit from Rs 1 crore to Rs 5 crore.