Published on:
February 6, 2023

Interest Subvention Scheme for MSMEs

The Interest Subvention Scheme is a government-backed program designed to provide financial support to Micro, Small, and Medium Enterprises (MSMEs) in India. The main aim of the scheme is to provide easier access to credit for MSMEs, as well as to lower the interest burden on loans taken by these businesses.

Under the scheme, MSMEs are eligible for a 2% interest subvention on loans up to Rs. 1 crore. This means that MSMEs can avail of loans at a reduced interest rate, making it easier for them to grow their businesses and create employment opportunities. The government provides a subsidy to banks and financial institutions, which is then passed on to MSMEs in the form of reduced interest rates on loans.

Benefits of  Interest Subvention Scheme

In addition to the interest subvention, the government also provides other benefits to MSMEs under the scheme, such as collateral-free loans, easier access to credit, and simplified loan application procedures. The scheme also provides support to MSMEs in the form of technology upgrades and skill development programs.

Eligibility of  Interest Subvention Scheme

To be eligible for the Interest Subvention Scheme, MSMEs must meet certain criteria, such as being registered with the government and having a good credit history. They must also have a viable business plan and be able to demonstrate their ability to repay the loan.

Changes in Interest Subvention Scheme

According to perceptions of industry specialists and monetary foundations, a portion of the parts of the Interest Aid plot went about as a deterrent to legitimate venture rollouts. Different elements that merited the advantages couldn't partake in the plan. Perceiving the difficulties looked by the MSMEs, the public authority declared a couple of changes to the plan. Here is a glance at the key changes:

1. Unwinding in UAN/GST necessity

According to prior leads, a qualified MSME was expected to have a substantial UAN (Udyog Aadhaar Number) and GSTN number to profit from the plan benefits. Nonetheless, since numerous units couldn't profit from the plan because of these standards, the public authority eliminated the models for UAN prerequisites for substances that have GST. Additionally, in the event that GST isn't relevant for a substance, the Personal Expense Dish can be utilized. On the other hand, a credit account with a monetary organization perceiving an MSME is likewise viewed as substantial.

2. Extension  of deadline for claims

The public authority has broadened the cutoff time for half-yearly cases accommodation. Subsequently, MSMEs who might have missed filling their cases before can take full advantage of this expansion.

3. Relaxation in exchanging standards

The public authority has now permitted MSMEs without UAN numbers however associated with exchanging exercises to participate in this plan. This will urge more MSMEs to complete exchanging and extend their business.

4. Simple cases settlement

As a feature of the changes, an MSME can present a legal reviewer declaration inside the cutoff time for claims settlement. With simpler case settlements, MSMEs can now appreciate more straightforward and bother-free installments to guarantee that their activities are flourishing.


Overall, the Interest Subvention Scheme is an important tool for MSMEs in India to access credit and grow their businesses. By providing financial support and reducing the interest burden on loans, the scheme helps MSMEs to create employment opportunities and contribute to the growth of the Indian economy.


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Updated on:
March 16, 2024