SIDBI revamps term loan scheme LIQUID for Covid-hit MSMEs; enables credit up to 20% of highest outstanding

The revised scheme is among multiple other offerings by SIDBI announced post-Covid to support MSMEs.

Credit and Finance for MSMEs: India’s principal financial institution for MSMEs — Small Industries Development Bank of India (SIDBI) – on Tuesday launched the revamped version of its liquidity scheme for Covid-hit MSMEs – Liquidity Support by Urgent Infusion of Funds Through Direct Finance Window (LIQUID) 1.0. Under LIQUID 2.0, SIDBI would enable term loan for its existing customers for the purpose of executing new orders, purchase of raw materials, machines, and equipment, clearing unpaid creditors, etc., the bank announced the launch on its YouTube channel on Tuesday. SIDBI said MSMEs would get assistance up to 20 per cent of their highest outstanding (both term loan and working capital counted) in the previous 12 months subject to a maximum of Rs 1.5 crore and aggregate exposure of Rs 2.5 crore under the first and second version of the scheme.

The bank noted that the scheme would involve zero contribution from the promoter of the enterprise. Moreover, subsidized interest rate, low processing fee, and no prepayment charges were among other features of the scheme, according to SIDBI.

SIDBI spokesperson was not immediately available for more details on LIQUID 2.0.

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The revised scheme is among multiple other offerings by SIDBI announced post-Covid to support MSMEs. Among recent initiatives, SIDBI had launched Shwas and Arog scheme in April this year for MSMEs manufacturing Covid-related goods and earmarked Rs 200 crore for the same, Financial Express Online had reported. While Shwas catered to MSMEs manufacturing oxygen cylinders, oxy-generators, oxygen concentrators, liquid oxygen or providing services in transportation, storage, refilling to supply of these items, Arog focused on enabling credit for MSMEs in manufacturing of products or providing services which are directly related to fighting Covid including pulse oximeters, permitted drugs such as (Remdesivir, Fabiflu, Dexamethasone, Azithromycin, etc), ventilators, PPE kits, etc.

In December last year, SIDBI had launched a DIY web portal for MSMEs to prepare their restructuring proposals on their own under the restructuring scheme by the Reserve Bank of India. MSMEs had to key in only the most essential data of their past financials, future projections, and restructuring requirement for the proposal.

Meanwhile, year-on-year growth in the deployment of gross bank credit to micro and small enterprises in March had declined to its lowest level, amid the second Covid wave, since May in the financial year 2020-21. The credit outstanding as of March 26, 2021, for the MSE sector, stood at Rs 11.07 lakh crore – up only 2.5 per cent from Rs 10.8 lakh crore in March 2020, according to the monthly bulletin by the Reserve Bank of India. The fall from 7.7 per cent in March last year to 3.3 per cent in April had reflected the likely early impact of the Covid breakout. Similarly, the current decline followed the second wave of the deadly virus that had started to hit in February. The credit growth had bounced back to 6.5 per cent in June last year after two months of decline.