Bank Finance under Self Employment Program (SEP) component of DAY-NULM

The Government of India, Ministry of Housing and Urban Affairs (MoHUA), had restructured the erstwhile Swarna Jayanti Shahari Rozgar Yojana (SJSRY) and launched the National Urban Livelihoods Mission (NULM) in 2013. NULM has been implemented in all district headquarters (irrespective of population) and all the cities with population of 1 lakh or more. The Self Employment Program (SEP) of NULM provides interest subsidy on loans to urban poorto support establishment of Individual & Group Enterprises and Self-Help Groups (SHGs). The scheme includes street venders/hawkers of urban poor for setting up gainful self-employment ventures/ micro-enterprises, suited to their skills, training, aptitude and local conditions. The SEP will also focus on technology, marketing and other support services to the above beneficiaries engaged in micro enterprises for their livelihoods and will also facilitate issuance of credit cards for working capital requirement of the entrepreneurs.

The erstwhile provision of capital subsidy for USEP (Urban Self Employment Program) and UWSP (Urban Women Self-Help Program) under SJSRY has been replaced by interest subsidy for loans to Individual enterprise (SEP-I), Group enterprise (SEP-G) and Self Help Groups (SEP-SHGs). In the year 2016, Government had enhanced the scope of NULM and renamed as “Deendayal Antyodaya Yojana -National Urban Livelihoods Mission (DAY-NULM)”.Under the scheme unemployed or under employed urban poor will be encouraged to start enterprises relating to manufacturing, service and small business for which there is considerable local demand.Local skills and local crafts are particularly encouraged.

Each Urban Local Body (ULB) that administers an urban area of minimum population of 100,000 shall develop a compendium of such activities/projects keeping in view skills available, marketability of products, costs, economic viability etc. The ULB will create awareness regarding SEP to the prospective beneficiaries through mass media campaigns, Information Education and Communication (IEC) activities, advertisements in local newspapers, City Livelihoods Centres (CLCs) etc. The ULB may also disseminate information regarding this component through active involvement of Resource Organizations and its field staff.

Selection of beneficiaries:

The prospective benefiicaries among the urban poor are identified by Community Organizers (COs) and professionals from Urban Local Body (ULB). The community structures formed under Social Mobilization & Institutional Development (SM&ID) component of DAY- NULM viz. Self Help Groups (SHGs) and Area Level Federations (ALFs) are also authorized to refer prospective individual and group entrepreneurs for purpose of financial assistance under SEP to ULB. The beneficiaries may directly approach ULB or its representatives for assistance. Banks may also identify prospective beneficiaries at their end and forward such cases directly to ULB. The Banks may also use their empaneled Business Correspondents (BCs) and Business Facilitators (BFs) to increase the outreach. Due diligence will be undertaken as per the Banks’ policy, in this regard. The application for individual and group enterprise loans will be sponsored by the Urban Local Body (ULB) which shall accept such applications of intents throughout the year.

Loans from the bank:

The cases duly recommended by the task force will be forwarded by the ULB to the concerned banks for further processing. Banks are required to process the application within 15 days from the receipt of applications recommended by the task force. As the cases are already processedby the task force, banks reject such proposals only in exceptional circumstances. Banks may also directly accept the loan applications of urban poor beneficiaries on the basis of relevant documents as per the guidelines of Prime Minister MUDRA Yojana (PMMY) or any other such scheme without the need of having prior sponsoring from ULB. The banks can send details of such loans sanctioned by them to ULBs for confirmation of their eligibility for interest subsidy under DAY-NULM. Task Force constituted for scrutinizing applications should quickly clear these applications if they otherwise meet the criteria. On confirmation of their eligibility, interest subsidy may be claimed from ULBs on the pattern of interest subsidy claim for beneficiaries sponsored by ULBs. The subsidy will be transferred directly to the loan account of DAY-NULM beneficiaries. This procedure will also be direct benefit transfer compliant.

The percentage of loan components disbursed under SEP to various types of beneficiaries should be as under;

1. Women beneficiaries : Not Less than 30%
2. SCs and STs: At least to the extent of the proportion of their strength in the city/town population of poor.
3. Differently abled: 5%  with priority to women
4. Minority communities:  At least 15 percent of the physical and financial targets as per Prime Minister’s 15-Point Program for the Welfare of Minorities.

Quantum of subsidy:

The difference between 7% p.a. and the rate of interest actally charged by the bank will be provided to banks as subsidy under DAY-NULM. Interest subsidy will be given only in case of timely repayment of loan. Suitable certification from banks will be obtained in this regard. An additional 3 percent interest subvention will be provided to all Women Self Help Groups (WSHGs) who repay their loan in time. The banks should credit the amount of 3% interest subvention to the eligible WHSGs accounts and thereafter seek the reimbursement from ULB.

Qualifications and Training Requirement:

No minimum educational qualification is required under the scheme. However, where the identified activity for micro-enterprise development requires some special skills appropriate training must be provided to the beneficiaries before extending financial support. Such training may not be necessary if the beneficiary has already undergone training from a known institution, registered NGO/Voluntary Organization or trained under any government scheme provided requisite certificate is produced. In case the beneficiary has acquired requisite skills from family occupation such cases should be certified by the ULB before extending financial assistance. In addition to skill training, the beneficiaries will get, the Entrepreneurship Development Program for 3-7 days for individual and group entrepreneurs. The EDP will cover basics of entrepreneurship development such as management of an enterprise, basic accounting, financial management, marketing, backward and forward linkages, legal procedures, costing and revenue etc. In addition to above topics the module will include group dynamics, allocation of work, profit sharing mechanism etc. for group enterprises.

Source: RBI circular