National Equity Fund in detail

The National Equity Fund Scheme has been set up by the SIDBI to provide equity type assistance to SSI units, tiny units at 5 percent service charges. Under this scheme equity support is available to entrepreneurs for setting up new projects in tiny, small scale sector for undertaking expansion, modernization , technology upgradation ,diversification and also for rehabilitation of viable sick units in the SSI sector which fulfill the eligibility criteria.

The scope of this scheme was widened in 2000-01 raising the limit of loan from Rs. 6.25 lakhs to Rs. 10 lakhs and project cost limit from Rs. 25 lakhs to Rs. 50 lakhs.


The following type of projects can avail the benefits of the equity fund scheme –

  • New projects in tiny and small sectors for the manufacture, preservation or processing of goods.
  • Existing tiny and small scale industrial units including those which have already availed NEF assistance, undertaken the expansion, modernisation, technology up-gradation, diversification etc.
  • All new and existing service enterprises, including those which have availed of NEF assistance (except road transport operators). However, in the case of service enterprises, the support under NEF would be made available only for the acquisition of fixed assets.
  • Sick units in the tiny and small scale sectors including service enterprises which are considered potentially.
  • It applies to the projects which utilise any margin money or special capital assistance under the schemes of state or central government, State financial corporations and banks will not be eligible for assistance.
  • Availment of refinancing with respect of term loan for the project by SIDBI is a pre-requisite for extending equity type assistance.


Project cost [including margin money for working capital] should not exceed Rs 50 lakh in case of new projects. In case of existing units and service enterprises, the total outlay, including the proposed outlay on expansion/ modernization/ technology upgradation / diversification or rehabilitation should not exceed Rs 50 lakh.


  • Soft loan assistance is permissible upto 25 % of the project cost subject to the maximum amount of Rs. 10 lakhs per project.
  • The RBI decides the rate of interest to be imposed by banks/SFCs for the various projects, presently which is 15.5%.
  • No interest is charged on the soft loan component except the service charge of 5% p.a.
  • No type of security or collateral is required for availing the soft loan.


***However, the projects covered under single window scheme can also be extended assistance under NEF Scheme. NEF assistance in such cases would be restricted to 25% of cost of the fixed assets (project cost less margin money for working capital).

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