Interest Subvention Scheme for MSMEs
Government of India · Central government
A 2% interest subvention scheme supports GST-registered MSMEs on their loans.
Open, rolling. Applications are accepted continuously — there is no deadline.
Key facts
- Subsidy amount
- Not specified
- Instrument
- Subsidy
- Deadline
- Rolling
About this scheme
2% interest subvention applies to fresh and incremental term loans and working capital for GST-registered MSMEs. The lender credits the subvention to the MSME’s loan account every quarter, and the government reimburses the lender for the amount. Borrowers do not need to file a separate application to avail of this benefit.
Who can apply
- Eligible business forms
- Not specified
- Udyam registration
- Not specified
- MSME registration
- Required
- DPIIT startup recognition
- Not specified
- GST registration
- Required
- Where the business may be based
- Not restricted
- GST-registered MSMEs holding Udyam Registration. - Availing fresh or incremental term or working-capital credit. - Credit sourced from scheduled commercial banks.
How to apply
- Confirm that your MSME has completed both Udyam Registration and GST registration. - Obtain a new or additional term loan, or a working capital facility, from a scheduled commercial bank. - Share your Udyam and GST details with your bank; there is no need to file a separate borrower application. - Your bank will automatically deposit a 2% interest subvention into your loan account on a quarterly basis. - Monitor your loan statement for these credits; reach out to your branch if the subvention does not show up. - For further information and revisions to the scheme, refer to msme.gov.in.
Frequently asked questions
What is the Interest Subvention Scheme for MSMEs?
GST-registered MSMEs can get a 2% interest subvention on fresh and incremental term loans and working capital borrowed from scheduled commercial banks.
Who is eligible?
GST-registered MSMEs holding Udyam Registration and taking fresh or incremental term loans or working capital credit from scheduled commercial banks are eligible.
Do I need to apply separately for this benefit?
No. You do not need to file a separate application. Your lender bank deposits the 2% subvention into your loan account every quarter and subsequently seeks reimbursement from the government.
Is this a grant or subsidy?
The scheme reduces the effective interest rate on your loan by 2%, meaning you repay the principal in full but incur lower interest charges.
How much can I save?
On a ₹50 lakh loan, a 2% interest subvention reduces your annual interest outgo by roughly ₹1 lakh. Your actual savings scale with your outstanding principal.
How do I access this benefit?
Inform your bank about your Udyam and GST registrations; the lender must credit the subvention on a quarterly basis. For the most recent rules, refer to msme.gov.in.
Details last verified on 7 September 2026. Source: the issuer's published information.