Interest Subvention Scheme for MSMEs — Frequently Asked Questions
Answers to the questions founders most often ask about Interest Subvention Scheme for MSMEs — who qualifies, the funding amount, required documents and how the application works.
Frequently asked questions
What is the Interest Subvention Scheme for MSMEs?
The scheme provides a 2% interest subvention (reduction) on fresh and incremental term loans and working capital availed by GST-registered MSMEs from scheduled commercial banks.
Who is eligible for this scheme?
GST-registered MSMEs with Udyam Registration that avail fresh or incremental term loans or working capital credit from scheduled commercial banks are eligible.
Do I need to submit a separate application to get the subsidy?
No. The borrower does not need to apply separately. The lender automatically credits the 2% subvention to your loan account on a quarterly basis and claims reimbursement from the government.
Is this a grant or loan? Do they take equity?
It is an interest subsidy — your effective interest rate is reduced by 2%. You still repay the principal loan amount. No equity is taken, and you do not need to repay the subsidy.
How much can I save through this scheme?
Savings depend on your outstanding loan amount. For example, on a ₹50 lakh loan, 2% subvention saves approximately ₹1 lakh per year in interest cost.
How do I access this benefit?
Ensure you have Udyam Registration and GST registration. When you avail a term loan or working capital from a scheduled commercial bank, inform the bank of your registrations. The bank will automatically credit the subvention quarterly. You can also visit msme.gov.in for latest guidelines.
What documents are needed to avail the subsidy?
You need to have valid Udyam Registration and GST registration. No additional documents are required from the borrower for the subsidy itself — the bank handles the subvention based on your loan account.
Is there an application deadline?
The scheme is rolling and always open. You can benefit at any time as long as you meet eligibility criteria and have an eligible loan from a scheduled commercial bank.
How is the subvention credited?
The lending bank credits the 2% interest subvention directly to your loan account every quarter. The bank then claims reimbursement from the government.
Is DPIIT recognition required for Interest Subvention Scheme for MSMEs?
No. DPIIT (Startup India) recognition is not listed as a mandatory requirement for Interest Subvention Scheme for MSMEs, though having it can strengthen your application and unlock other benefits.
Who offers Interest Subvention Scheme for MSMEs?
Interest Subvention Scheme for MSMEs is offered by Government of India, a government body. It is provided as non-dilutive funding.
How do I apply for Interest Subvention Scheme for MSMEs?
Apply directly through the official application link on this page. Review the eligibility criteria and prepare your startup documents before you begin.