The Stand-Up India Scheme is launched by Government of India to generate the profitable employment to hitherto underserved segment of our society. The scheme provides bank loans between 10 lakh and 100 lakh to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a Greenfield enterprise. In this context, ‘Greenfield ‘means the first time venture of the beneficiary in the non-farm sector viz. manufacturing or services or trading sector. In the case of non-individual enterprises, such enterprises, the majority shareholding (at least 51%) and the controlling stake should be held by either an SC/ST or woman entrepreneur, to be the beneficiary of the scheme. The scheme is projected to cover at least 2.5 lakh beneficiaries in 36 months from the date of launch through the network of 1.25 lakh bank branches of all the Scheduled Commercial Banks in India.
Salient features of the scheme
- Eligibility: The SC/ST and/or woman entrepreneurs of above 18 years of age are eligible beneficiaries under the scheme. The borrower should not be in default to any bank/financial institution.
- Accesses to the facility: The borrower can access for loans directly at any Bank Branch or through Stand-Up India Portal or through ‘Lead District Manager.
- Nature of finance: The finance available both in the form of the term loan and working capital (composite loan) between 10 lakh and up to 100 lakh for setting up projects in the non-farm sector.
- Margin Money (subsidy): The Scheme envisages 25% margin money (subsidy) which can be provided in convergence with eligible Central schemes (viz. subsidy schemes of PMEGP, NSFDC, Coir board, NSIC etc.) and various State subsidy schemes. Even though such schemes can be drawn upon for availing admissible subsidies or for meeting margin money requirements, in all cases, the borrower shall be required to bring in the minimum of 10% of the project cost as own contribution.
- Size of the finance: The beneficiaries of ‘Stand -Up India’ scheme are eligible for maximum 75% of the project cost inclusive of both term loan and working capital facility (composite loan). The loan stipulation being expected to cover 75% of the project cost would not apply if the borrower’s contribution along with convergence support from any other schemes exceeds 25% of the project cost, i.e. the borrower shall be required to bring in minimum of 10% of the project cost as own contribution, irrespective of margin money received.
- Interest Rate: The rate of interest would be the lowest applicable rate of the bank for that category (rating category) not to exceed (base rate (MCLR) + 3%+ tenor premium).
- Security: Besides primary security, banks may take a decision to obtain collateral security or guarantee of Credit Guarantee Fund Scheme for Stand-Up India Loans (CGFSIL).
- Repayment: The loan shall be repayable in 7 years with a maximum moratorium period of 18 months.
- Working Capital limit: Overdraft facility may be sanctioned for drawal of Working capital limit up to 10 lakh and for Working capital of above 10 lakh limit should be sanctioned by way of Cash Credit limit.
- RuPay debit card to be issued for the convenience of the borrower.
It is mentioned that the scheme provides loans between 10 lacs and 100 lacs. Then how come working capital is provided in the form of OD upto Rs.10.00 lacs.
Is it like this…..If WC is sanctioned for Rs.15.00 lacs, the limit will be split into two limits i.e. upto 10 lacs OD account and for balance Rs.5.00 lacs CC limit.
Kindly clarify.
The key difference is that the Overdraft is the financial assistance provided by the banks against fixed assets, as security, whereas, cash credit is the facility extended by the banks, against the current assets of the borrowing entity.
Overdraft facility is provided to meet short-term current obligations by providing immediate cash flow, this is in addition to CC limit against stock and book debts. There shall be a monthly reduction in the amount of overdraft and over a period of time the limit should be fully liquidated.