RBI has announced special refinance facilities to NABARD, SIDBI, and NHB for a total amount of INR 50,000 crore at the policy repo rate. This package is introduced to cater to various sections, including cottage industry, MSMEs, labourers, the Middle Class, and Industries, among others.

The vision of the Prime Minister

A. Self-Reliant India Movement

B. Economy, Infrastructure, System, Vibrant Demography, and Demand are considered as the five pillars for Atmanirbhar Bharat

C. An amount equivalent to 10% of Indian GDP, that is of INR 20 Lakh crores, is introduced as a Special economic and comprehensive package.

D. This package is introduced to cater to various sections, including cottage industry, MSMEs, labourers, the Middle Class, and Industries, among others

E. Bold reforms will help the country and push it towards self-reliance

F. The Prime Minister has introduced a slogan for self-reliance that is VOCAL FOR LOCAL

G. Two Packages under Pradhan Mantri Garib Kalyan have been introduced to fight the battle against the Coronavirus. This Package is of 1.7 Lakh Crore to help the poor in this pandemic situation

Other Measures

A. On the request of the Government of India, RBI raised the State Advance Ways and Means by 60 per cent and increased the Overdraft time limits

B. Issued all the income tax refunds pending up to a total of 5 lakh, benefiting immediately about 14 lakh taxpayers

C. Implemented "Special Refund and Drawback Disposal Operation" for all pending requests for refunds and drawbacks

D. Both of the above measures amount to a refund of about 18,000 crores.

E. Sanctioned Rs 15,000 crores for the medical emergency response package

F. Relaxation in Statutory and Compliance Measures

- Return filing of Income-tax due date has been extended till June 30

- Return filing of GST due date has been extended till June 30

- 24 X 7 customs clearance till 30th June 2020

- No Transaction charges will be charged on ATM  withdrawal from the debit card for the next three months

- Allowing payment before 15th May 2020 for Motor Vehicle and health insurance policies

- Board meeting (mandatory) extended by 60 days till 30 September

- EGM (Extraordinary General Meeting) can be conducted through Video conferencing through the e-voting facility.

Measures Taken by the Reserve Bank of India

A. CRR (cash reserve ratio) has been reduced, which will result in the enhancement of liquidity of INR 137000 crore

B. For fresh development in investment-grade corporate bonds, commercial paper, and non-convertible debentures, RBI has targeted Long Term Repo Operation of INR 100050 Crore

C. Targeted Long Term Repo Operation of INR 50000 Crore for investing them in investment-grade bonds, commercial paper, and non-convertible debentures of NBFCs and MFIs.

D. Increased the banks’ limit for borrowing overnight under the marginal standing facility (MSF), allowing the banking system to avail an additional ₹1,37,000 crore of liquidity at the reduced MSF rate.

E. RBI has announced special refinance facilities to NABARD, SIDBI, and NHB for a total amount of INR 50,000 crore at the policy repo rate

F. Announced the opening of a special liquidity facility (SLF) of ₹50,000 crores for mutual funds to alleviate intensified liquidity pressures.

G. A moratorium of three months on payment of installments and payment of Interest on Working Capital Facilities in respect of all Term Loans

H. Easing of Working Capital Financing by reducing margins

I. For NBFC loans to the commercial real estate market, an additional one-year extension of the start date for commercial operations (DCCO) has been issued.

Union Finance Minister Nirmala Sitharaman announced a set of steps to support micro, small, and medium-sized enterprises (MSMEs) damaged by the coronavirus crisis on Wednesday.

a. INR 3 Lakh crores Collateral-free automatic loans for business, including MSME

b. Rs 20,000 crores Subordinate Debt for MSMEs

c. Rs 50,000 crores equity infusion through MSME Fund of Funds

. Global tender to be disallowed uptoRs200 crores

. Other interventions for MSMEs

. Rs2500 crores EPF support for Businesses and Workers for 3 more months

. EPF contribution reduced for Business & Workers for 3 months-Rs 6750 crores

h. Rs30,000 crores Liquidity Facility for NBFC/HCs/MFIs

i. Rs45,000 crPartial Credit Guarantee Scheme 2.0 for NBFC

j. Rs90,000 car liquidity Injection for DISCOMs

. Relief to contractors

. Extension of Registration and Completion Date of Real Estate Projects under RERA

. Rs50,000 cr liquidity through TDS/TCS reductions

n. Other Direct Tax Measures

INR 3 Lakh crore Collateral-free automatic loans for business, including MSME

a. Businesses/MSMEs have been badly hit due to the pandemic (COVID-19), and to revive its government has introduced collateral-free automatic loans to meet operational liabilities built up by raw materials and restart business

b. Decision: Emergency Credit Line to Businesses/MSMEs from Banks and NBFCs up to 20% of the entire outstanding credit as on 29.2.2020

c. Borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover are eligible

d. Loans to have a 4-year tenor with a moratorium of 12months on Principal repayment

e. Interest to be capped

f. 100% credit guarantee cover to Banks and NBFCs on the principal and interest

g. The scheme can be availed till 31st Oct 2020

h. No guarantee fee, no fresh collateral

i. 45 lakh units can resume business activity and safeguard jobs

Rs 50,000 cr. Equity infusion for MSMEs through FUND OF FUNDS

a. MSMEs face a severe shortage of Equity.

b. Fund of Funds with a Corpus of Rs 10,000 crores will be set up.

d. Will provide equity funding for MSMEs with growth potential and viability.

e. FoF will be operated through a Mother Fund and a few daughter funds

.  Fund structure will help leverage Rs50,000 cr of funds at the daughter fund level

. It will help to expand the MSME size as well as capacity.

h. Will encourage MSMEs to get listed on the main board of Stock Exchanges.

Definition of MSME

Previous Definition

Revised Definition

Micro means

 

For the manufacturing sector

Micro means an enterprise where investment in plant and machinery does not exceed Rs 25 lakh.

 

For the service Sector

Micro means an enterprise where investment in plant and machinery does not exceed Rs 10lakh.

 

Micro means

 

For the Manufacturing and service sectors, both

Micro means an enterprise where investment in plant and machinery does not exceed 1 crore and Turnover does not exceed 5 crores.

 

 

 

 

Small means

 

For the manufacturing sector

Micro means an enterprise where investment in plant and machinery is more than Rs 25 lakh but does not exceed Rs 5 Crore. 

 

For the service Sector

Micro means an enterprise where investment in plant and machinery is more than Rs 10 lakh but does not exceed Rs 2 Crore. 

Small Means

 

For the Manufacturing and service sectors, both

Micro means an enterprise where investment in plant and machinery is more than Rs 1 crore but does not exceed Rs 10 Crore, and Turnover does not exceed 50 crores.

 

 

 

 

Medium means

 

For the manufacturing sector

Medium means an enterprise where investment in plant and machinery is more than Rs 5 crore but does not exceed Rs 10 Crore. 

 

For the Service Sector

Medium means an enterprise where investment in plant and machinery is more than Rs 2 crore but does not exceed Rs 5 Crore.

Medium means

 

For the Manufacturing and service sector, both 

Micro means an enterprise where investment in plant and machinery is more than Rs 10 crore but does not exceed Rs 20 Crore, and Turnover does not exceed 100 crore.

 

 

 

 

 

Global tenders to be disallowed up to Rs 200 crores

a. Foreign companies have often faced unfair competition from Indian MSMEs and other firms.

b. Therefore, in government procurement tenders up to Rs 200 crores, global tenders will be disallowed

. Appropriate amendments to the General Financial Rules will be made.

 

MSMEs currently face marketing and liquidity problems because of COVID.

a. E-market linkages for MSMEs to be promoted as a replacement for trade shows and exhibitions.

b. Using e-marketplace-generated data, Fintech will be used to improve transaction-based lending.

d. Continuous monitoring of the settlement of duties to the government and central public sector MSME vendors

 

Rs. 2500 crore EPF Support for Business & Workers for 3 more months

a. Businesses continue to face financial stress as they get back to work.•

b. Under Pradhan Mantri Garib Kalyan Package (PMGKP), payment of 12% of employer and 12% employee contributions was made into EPF accounts of eligible establishments.

c. This was provided earlier for the salary months of March, April, and May 2020

d. This support will be extended by another 3months to the salary months of June, July, and August 2020

e. This will provide liquidity relief of Rs 2500 cr to 3.67 lakh establishments and for 72.22 lakh employees.

 

Rs 30,000 crore Special Liquidity Scheme for NBFCs/HFCs/MFIs

a. NBFCs/HFCs/MFIs are finding it difficult to raise money in debt markets.

b. The government will launch a Rs 30,000 crore Special Liquidity Scheme

c. Under this scheme, investment will be made in both primary and secondary market transactions in investment-grade debt paper of NBFCs /HFCs /MFIs

d. Will supplement RBI/Government measures to augment liquidity

e. Securities will be fully guaranteed by the GoI

f. This will provide liquidity support for NBFCs /HFC /MFIs and mutual funds and create confidence in the market

 

Rs 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs

a. NBFCs, HFCs, and MFIs with low credit ratings require liquidity to do fresh lending to MSMEs and individuals

b. Existing PCGS scheme to be extended to cover borrowings such as primary issuance of Bonds/CPs (liability side of balance sheets) of such entities

. First, 20% of the loss will be borne by the Guarantor, ie, the Government of India.

d. AA paper and below, including unrated paper eligible for investment (esp relevant for many MFIs)

e. This scheme will result in the liquidity of Rs 45,000 crores