- Commercial Banking
- DRS SME Scheme
DRS SME SchemeDebt Restructuring Mechanism : Small and Medium Enterprises (SMEs)
- SME Includes
Tiny Industries, Small Scale Industries (SSI), Medium Industries (ME) and Small Service & Business Enterprises.
- Eligibility Criterion
Following viable or potentially viable SMEs are eligible
- All non-corporate SMEs irrespective of the level of dues to bank.
- All corporate SMEs, which are enjoying credit facilities from a single bank, irrespective of the level of dues to the bank.
- All corporate SMEs, which have funded and non-funded outstanding up to Rs.10 Crores under multiple / consortium banking arrangement. Accounts involving fraud and malfeasance and / or classified, as "Loss Assets" will not be eligible for restructuring under these guidelines.
- Viability criteria
The unit should become viable in 7 years and the repayment period for restructured debt shall not exceed 10 years.
- Restructuring Parameters
- Minimum ROCE (Return on Capital Employed) equivalent to 5 years G. Sec. + 3%.
- Minimum Average DSCR (Debt Service Coverage Ratio) should be more than 1.25 and in every year it should be more than 1.
- Benchmark gap between IRR (Internal Rate of Return) and COF (Average Cost of Funds) should be at least 1%.
- Implementation Period
60 days from date of receipt of request / reference.
- Extent of Relief / Concession / Sacrifice
Interest not below the ceilings mentioned as under.
- Working Capital: Interest 1.5% below the contracted rate.
- Funded Interest Term Loan: Interest Free.
- Working Capital Term Loan: Interest 1.5% below the contracted rate.
- Term Loan: Concession in Interest not more than 2% (not more than 3% in case of tiny / decentralized sector units) below the contracted rate.
- Additional Loan / Contingency Loan Assistance: Interest not below 1.5% from BPLR of Bank i.e. presently 15%
Note:- Rate of interest is subjected to change on review of company's performance and the prevailing interest rate scenario after every 3 years from the date of sanction.