GOVERNMENT-SPONSORED CREDIT-LINKED SCHEMES | SFB STUDY MATERIAL
This article will talk about some major government-sponsored credit-linked schemes and key objectives, benefits and developments under such schemes so far.
These CAIIB elective notes aim to provide you with simplified study material. You can also refer to the lectures that are available on our YouTube channel.
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DAY-NRLM (Deendayal antodaya yojana-National rural livelihoods mission)
- Launched under the Ministry of MoRD (Ministry of rural development).
- Centrally sponsored scheme
- Financing programme b/w the Centre and the States in the ratio of 75:25, In the case of North Eastern States including Sikkim, it’s 90:10).
B. Key objectives
- Building, nurturing and strengthening the institutions of poor women (SHG and village-level federations included).
- Continuous support to institutions of the poor for a period of 5 to 7 years.
- Ascertain that each designated rural poor home has at least one member, ideally a woman, who is swiftly integrated into the Self-Help Group (SHG) network.
- Cover the vulnerable sections of society.
C. Distribution of benefits:
- SC/ST: 50%
- Minorities: 15%
- Persons with disability: 3%
while aiming to provide BPL families with 100% coverage in the long run Self-help groups for women are encouraged by DAY-NRLM.
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D. Action plans in poverty reduction: State-specific
- States can provide a variety of high-quality services to rural impoverished.
- To professionalise the human resource at State, district and block levels state rural livelihood mission enabled
- Continuous capacity building
- Impart requisite skills
- Create linkage with livelihood opportunities for the poor
- Monitoring against targets of poverty reduction outcomes
- Through SRLMs or partner institutions
- Intensive blocks and districts (In which all of the DAY-NRLM components will be implemented either using the SRLMs or partner organisations or NGOs) & Non-intense blocks and districts (in which none of the components will be implemented).
- Demographic vulnerability-based selection of intensive districts and blocks.
- In a phased manner, all districts are going to be made intensive districts
E. Women’s self-help groups and federations
SHG mainly consists of 10 to 15 women. For groups formed in challenging environments, groups with individuals with disabilities, and groups formed in remote tribal communities, the minimum number of participants maybe 5.
Only groups formed by people with disabilities and others like the elderly and transgender people will have both men and women in them under DAY-NRLM.
All women SHGs with more than 70% BPL or rural poor members are considered SHGS under this programme.
SHGs are not required to register under the Societies Act, the State Cooperative Act, or as a partnership firm because they are an unofficial group.
Federations of Self-Help Groups, on the other hand, may register under the relevant acts presently in force in their States if they were established at the village, Gram Panchayat, Cluster, or higher level.
Financial assistance to SHG
- Revolving fund
To instil the habit of saving money and building up their resources to meet their long-term credit demands and short-term consumption needs a revolving fund is given to SHGs as an incentive.
To SHGs that have been operating according to the “Panchasutra” for at least 6/3 months, DAY-NRLM offers Revolving Fund support. Only SHGS that have never received RF before will be given RF, as a corpus, in the range of Rs. 10000–15000.
Panchsutra refers to performing the following:
- Regular meetings
- Save regularly
- Regular internal lending
- Regular recovery
- Maintain proper books of accounts
- Discontinuation of capital subsidy under DAY-NRLM
No SHG will be eligible for a capital subsidy starting on the day when DAY-NRLM is put into effect.
- CIF (Community Investment Support Fund)
The SHGs in the intense blocks will get CIF through the Village level/Cluster level Federations, which will then be responsible for maintaining them forever.
The Federations will use the CIF to fund loans to SHGs and/or conduct shared/cooperative socio-economic activities.
- Interest subvention scheme for women SHGs
- Interest subvention for all commercial banks (PSU, PSBs & RRBs) and cooperative banks in 250 districts.
- Banks provide loans to all female SHGs in designated districts at a rate of 7% per year up to an advance of Rs. 3,00,000 (CC/OD/CC+OD).
- The State Rural Livelihood Mission provides subsidies for the difference between loan rates and 7% (up to a maximum of 5.5%).
- On timely repayment, the SHGs additionally receive an additional 3% interest subsidy, bringing the overall interest rate down to 4%.
- The opening of accounts for SHGs, including members with disabilities and the Federations of the SHGs, is the first step in the function of banks.
- For Interest Subveitional 3% on Prompt Repayment, an SHG account shall be regarded as a Prompt Payee if it meets the following criteria.
|For term loans||For cash credit limit|
|A balance that is past due cannot constantly exceed the limit or draw power for more than 30 days.
The accounts should consistently show credits and debits.
In any event, there must be at least one customer-induced credit per month.
This credit should be large enough to cover the interest that was debited for the month.
|An account for a term loan where all interest and/or principal payments were made within the loan’s duration within 30 days of the due date
Through a Nodal Bank chosen by the Ministry of Rural Development, the Interest Subvention plan has been put into place for all commercial banks (apart from RRBs).
The programme will be implemented by NABARD like the credit programme for RRBs and cooperative banks.
The interest subsidy offered by the programme is available to all Commercial Banks (including PSBs, Private Banks, and RRBs) using Core Banking Solutions (CBS).
Interest subvention for other districts: Category II
The loan facility will continue to be available to all women SHGs under the DAY-NRLM programme with an interest rate of 7% for category II districts, which includes districts outside of the 250 districts.
Bank’s role in the Implementation of DAY-NRLM
|Establishment of SHGs’ Savings Accounts||Establishment of Federation of SHGs Savings Account||Account transactions for SHGs and the Federation of SHGs|
|Banks are encouraged to have separate savings and loan accounts for Self Help Groups.
The “Know Your Customer” (KYC) regulations involving SHGs that are periodically established by the Central Bank of India shall apply.
|These accounts could fall under the category of savings accounts for associations of people.
The “Know Your Customer” (KYC) requirements for signatories of such accounts, as periodically stated by the Central Bank of India, would apply.
|It has been recommended to banks that they permit transactions in jointly managed savings accounts of SHGs and their federations at retail establishments controlled by Business Correspondent Agents.
Additionally, banks have been recommended to use Business Correspondent agents to provide all of these services to SHGs and their federations.
- Loan availing eligibility criteria
According to the SHGs’ books of accounts, SHGs must have been operational for the previous six months at the very least, not just since the date when the SB a/c was opened.
The “Panchasutra” should be followed by SHGs, which includes regular meetings, savings, interlopes, timely repayment, and up-to-date books of accounts.
Eligible based on NABARD-established grading standards.
Depending on their needs, term loans, cash credit limits, or both may be available to SHGs.
|It must be at least Rs 1 lakh or six times the current corpus, whichever is greater.||The higher of 8 times the corpus at the time of review or enhancement or a minimum of Rs 2 lakh shall apply.||A minimum of Rs 3 lakhs, as determined by the microcredit plan created by SHG, evaluated by the federations or support organisations, and the prior credit history.||Based on the SHG’s Micro Credit Plan, which was evaluated by the Federations/Support Organizations, and the SHG’s Prior Credit History, a minimum of Rs 5 lakhs.|
|In 6 to 12 months, the loan will be paid back in monthly or quarterly instalments.||In 12 to 24 months, the loan will be repaid in monthly or quarterly instalments.||The loan will be repaid in monthly or quarterly instalments over a 24–36-month period.||Depends on the cash flow and must be paid back between three and six years in monthly or quarterly instalments.|
- Security and margin
No collateral or margin is required for loans up to 10 Lakh, no lien is required, and no deposits are required.
- Scheme monitoring and supervision
Banks should set up DAY-NRLM cells to monitor and review credit flow, ensure implementation, collect data, and make available consolidated data.
- Deendayal antodaya yojana-National urban livelihood mission
- Launched under the Ministry of Housing and Urban poverty alleviation (MoHUPA)
- It has been implemented in all district headquarters and cities with a population of 1 lakh or more.
- It provides loans to urban poor, homeless persons, and street vendors to join the entrepreneurial revolution.
- The programme includes loans for Self-Help Organizations, Group Enterprises, and Individual Businesses (SEP-I, SEP-G).
COs (Community organisers) and ULB (Urban local bodies) will identify urban poor beneficiaries.
- Educational Qualification
Qualification is no bar.
- Financial assistance patter
A capital subsidy is not provided, but an interest subsidy is provided to the urban poor in setting up enterprises.
- Individual enterprises (SEP I)
- The beneficiary must be at least 18 years old.
- The maximum project cost is 2 Lacs, no collateral is required (Banks may seek a guarantee under CGTMSE), and
- The repayment schedule ranges from 5-7 years, post initial moratorium of 6-18 months).
- Group Enterprises (SEP G)
- The group enterprise should have a minimum of 3 members from urban poor families with 70% urban poor families, preferably referred by community structures.
- Members of a group should be 18 years old.
- The maximum unit project cost for a group enterprise is Rs 1000000.
- Banks can offer guarantee cover under CGTMSE without collateral security.
- Post moratorium of 6-18 months, the repayment period ranges from 5 to 7 years.
- Urban Local Bodies/Municipalities are to carry out home-to-home surveys to identify beneficiaries, with a target of 30% women, 3% disabled, and SC/ST-Pro-rata to the local population.
Chief Executive Officer (CEO) of ULB, Municipal Commissioner of ULB, or any individual that the CEO of ULB has designated as a representative
City Project Officer (CPO), ULB/or any authorized representative Member of ULB
- Lead District Manager (LDM)
- A representative from District Industries Centre (DIC)
- Senior Branch Managers (Max-2) of banks
- (2) Area Level Federation/City Level Federation representatives
- PMEGP (Prime minister employment generation programme)
- MMSME (Ministry of MSME) merged PMRY (Pradhan Mantri Rozgar Yojana) and REGP (Rural Employment Generation Programme) to create KVIC (khadi and village industries commission).
- Creating employment opportunities in rural-urban India through new self-employment projects, micro-enterprises, and traditional artisans/unemployed youth.
- The scheme applies to both urban and rural areas throughout India.
- Individuals above 18 having 8th std passed are eligible for (Only one person from a family is eligible):
Manufacturing: 50 lacs
Business & Services: 20 lacs
(PMEGP has no income ceiling)
- Family (spouse & self) is eligible for assistance (BPL included) if they have not availed benefits under other schemes.
- Maximum project cost
- Unlimited for the Manufacturing sector Business sector & service sector.
- The project cost does not include the cost of the land.
- Costs for the project will include capital expenditures and working capital for one cycle.
- The Program does not fund projects that do not include capital outlays.
The subsidy distribution is as follows:
In the case of the general category: 15% for Urban and 25% for Rural.
In the case of special category: 25% for Urban and 35% for Rural.
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