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.

GST-registered MSMEs with Udyam Registration who are availing fresh or incremental term loans or working capital credit from scheduled commercial banks.

Do I need to apply separately for this benefit?

No. The borrower does not need to submit a separate application. The lender bank credits the 2% subvention directly to your loan account on a quarterly basis and then claims reimbursement from the government.

Is this a grant or subsidy?

It is an interest subsidy — your loan account receives a 2% reduction in effective interest rate. You still repay the principal; you simply pay less interest.

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?

Inform your bank that you hold Udyam Registration and GST registration. The lender is responsible for crediting the subvention quarterly. You can also check msme.gov.in for the latest guidelines.

Interest Subvention Scheme for MSMEs

By Government of India

Rolling Applications

Quick Answer

2% interest subvention on MSME loans for GST-registered businesses

Funding amount: Varies
Funding type: Subsidy
Provider: Government of India
Application deadline: Rolling
Location: Open to startups registered in India

Subsidy providers

Provider

Government of India

New Delhi · Delhi · India

Application Process

1
Obtain free Udyam Registration and GST
Obtain free Udyam Registration and GST registration — both are mandatory prerequisites.
You
2
3
4

How to apply

Four steps from draft to disbursement — one action each.

1
Submit on the official portal
Use the official application link and verify all details before final submission.
2
Follow up
Reach out 5–7 days after submitting to confirm receipt and ask about the review timeline.

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Interest Subvention Scheme for MSMEs

Interest Subvention Scheme for MSMEs

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