Kerala Financial Corporation launches scheme to benefit MSME sector
Kerala Financial Corporation (KFC), Thiruvananthapuram-based premier government financial institution on Thursday launched a special credit facility for the Micro, Small and Medium Enterprises (MSME) sector to help them execute work orders and clear their pending bills. can get help.
Under the scheme, 75 percent of the cost of work received from government departments/agencies/public sector undertakings will be provided as loan. Repayment will be based on the duration of the work and the expected receipt of funds from the awarding authority. The interest rate will be linked to the credit rating score of MSMEs starting from 8 per cent.
Keeping in view the COVID-19 situation, the credit rating of MSMEs will be based on the analysis of the balance sheet of the pre-COVID period, said an official release by the state government. Once the bill is accepted by the work awarding authority, MSMEs can get up to 90 per cent of the bill amount with immediate rebate. For final bills, discounts can be given even without security.
Micro, Small and Medium Enterprises (MSMEs) play an important role in the economic development of the country. However, they are facing hurdles in getting adequate finance, especially in terms of finding funds to execute work orders and converting their bill receivables into liquid funds. KFC’s plan will be apt to address such issues faced by the MSME sector during this pandemic period.
To become eligible for the scheme, the MSME enterprise of the applicant must be registered. GST registration and latest audited balance sheet are also mandatory. However, GST registration will not be applicable to MSMEs exempted from registration. If the MSME’s annual turnover is up to Rs 200 lakh and they are paying income tax on an estimated basis, then an audited balance sheet will not be insisted upon.
The loan will be sanctioned as a Line of Credit (LoC) for a period of five years where MSMEs can avail facilities like guarantee, performance loan, bill waiver, government promissory note waiver, equipment finance, etc. The maximum assistance will be Rs 20. Rs. crore for companies/registered co-operative societies and Rs.8 crore for others. However, the limit of guarantee and exemption of Government undertakings will be up to Rs 50 crore for all entities.
The validity of the LOC is for five years. Once the customers have executed the loan agreement, they can avail all the facilities for the entire five year period without any formalities. The scheme will be reviewed with the feedback from MSMEs. KFC has set a target of disbursing at least Rs 500 crore under this scheme in this financial year itself.
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