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DRS SME Scheme

Debt Restructuring Mechanism : Small and Medium Enterprises (SMEs)

  1. SME Includes    
    Tiny Industries, Small Scale Industries (SSI), Medium Industries (ME) and Small Service & Business Enterprises.
  2. 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.
  3. Viability criteria
    The unit should become viable in 7 years and the repayment period for restructured debt shall not exceed 10 years.
  4. 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%.
  5. Implementation Period
    60 days from date of receipt of request / reference.
  6. 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%            
In no case sacrifice in principal and simple interest shall be considered.

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.