BACK-ENDED INTEREST SUBSIDY TO Micro and Small Enterprises (MSEs)

The new scheme of Back-ended Interest Subsidy to MSEs for the term loans obtained from Banks and financial institutions for technology upgradation / modernization, term loan and working capital loan obtained under Credit Guarantee Fund Trust Scheme (CGFTS), term loan obtained under National Equity Fund Scheme (NEFS), term loan obtained for obtaining ISO Certification, Research and Development resulting in registration of Patent Rights, Intellectual Property Rights, Composite Term loan (CTL) obtained from National Small Industries Corporation and  National Small Industries Corporation - Tamilnadu Small Industries Development Corporation  Consortium has been introduced during 2003-04 to reduce interest burden to Small Scale Industries. The quantum of back-ended interest subsidy is 3% over and above the Prime Lending Rate (PLR) or the excess of actual rate of interest over the PLR whichever is less. In cases where PLR is not followed by any of the financial institutions, the excess of the actual rate of interest over 10.5% subject to a maximum of 3% is allowed as subsidy. This subsidy is sanctioned by way of quarterly reimbursements to the financial institutions for a maximum period of 5 years irrespective of the period of repayment of loan and the maximum amount of subsidy payable per loan is Rs. 15 lakh.

The MSEs shall manufacture quality products at competitive rates, to survive in the present global market and face challenges of WTO.  Further, to manufacture quality products at competitive rates, the existing MSEs shall go for technology upgradation and modernisation create Research and Development facilities and obtain ISO Certification.

To encourage the MSEs for technology upgradation and modernisation, ISO certification and Research and Development facilities, the following incentives are given by Tamilnadu Government.

a.      3% Back-ended interest subsidy to MSEs for the term loan obtained for Technology Upgradation and modernisation.

b.      3% Back-ended interest subsidy to MSEs for the term loan obtained under National Equity Fund Scheme of SIDBI.

c.      3% Back-ended interest subsidy to micro enterprises for composite term loan obtained under NSIC-SIDCO Consortium, composite term loan and loan obtained by Tiny Industries under Credit Guarantee Fund Trust Scheme from any bank or financial Institutions.

d.      3% Back-ended interest subsidy to MSEs for the term loan obtained for ISO certification and for the term loan for taking up R&D resulting in Patent Registration and protection of intellectual Property Rights Registration.