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‘Distressed Assets Fund-Subordinate Debt for MSMEs’

Current Context: A ‘Distressed Assets Fund-Subordinate Debt for MSMEs’ is the credit guarantee scheme for sub-ordinate debt (CGSSD).
‘Distressed Assets Fund-Subordinate Debt for MSMEs’
  • The scheme is launched by Union Minister for MSME Nitin Gadkari.
  • The scheme will provide Rs 20000 crore guarantee cover to about two lakh MSMEs.
  • The ‘Distressed Assets Fund-Subordinate Debt for MSMEs’ is a part of Atma Nirbhar Bharat package and aims to sub-ordinate the debts to the promoters of operational but stressed MSMEs.
  • The scheme will extend the support to the promoters of the operational MSMEs which are stressed and have become NPA as on 30th April 2020.
  • To promoters of such MSMEs will be given a credit equal to 15% as equity of their stake or finance of Rs 75 lakh, whichever is lower.
  • Promoters infuse the amount in the MSME unit as equity and enhance the equity and maintain the debt-equity ratio.
  • 90% of guarantee coverage for the sub-debt will be given under the scheme and 10% would come from concerning promoters.
  • The maximum tenure of repayment is 10 years.

Question: 

Q.1 What amount of guarantee cover will be offered to MSMEs under Distressed Assets Fund-Subordinate Debt for MSMEs’ which is the credit guarantee scheme for sub-ordinate debt (CGSSD)? 
a. Rs 30000 crore
b. Rs 15000 crore
c. Rs 20000 crore
d. Rs 10000 crore
‘Distressed Assets Fund-Subordinate Debt for MSMEs’ ‘Distressed Assets Fund-Subordinate Debt for MSMEs’ Reviewed by Neha Verma on June 25, 2020 Rating: 5

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