Micro Financing Scheme
Micro Credit Scheme Implemented through State Channelising Agency (SCA)
Introduction
National Handicapped Finance and Development Corporation (NHFDC) has been set up to promote economic and development activities undertaken by persons with disability. The Corporation assists them by providing loans for self-employment and other economic ventures. The majority of disabled population is constantly in need of small loans for sustaining their existing employment, for generation of further employment as also for meeting varied personal and social needs. The poorest among the poor need loans of very small amount but their requirement is quick delivery of loan at their doorsteps. Traditionally, private money lenders have been playing this role but their intention has been to exploit the poor instead of helping them and this rather worsened plight of the poor. Over a period of time, the significance of provision of credit as an instrument of socio-economic change and development is being realised and many international and national organisations including the nationalised banks have come up to provide soft loans to the poor in order to free them from the clutches of private money lenders. However, the task is gigantic and a wide gap persists in meeting the credit needs of the poor. With this in mind, the NHFDC has decided to implement the Micro Credit Scheme as per details given in the following parts.
Main Features of the Scheme-
- Purpose of Loan
Purpose of the loan is to provide financial assistance to weaker section of the disabled for starting or augmenting income generation activities. The illustrative nature of income generating activities is given below :
I. Small business/trade
II. Tiny/cottage industry or service activity
III. Artisan activities
IV. Agricultural and allied activities
V. Transport sector activities
- Quantum of Loan and Rate of Interest
Under the Micro Credit Scheme, loan is given to the SCAs for further disbursement to individual beneficiaries, self-help groups of disabled persons through Non Government Organisations.
The maximum amount of loan to an NGO will be limited to Rs. 5.0 lakh (Rupees Five Lakh only). However, the NGO may be sanctioned repeated loan considering its previous performance, repayment record, utilization of loans etc. However, at any given time, the principal amount outstanding against the NGO will not exceed Rs. 5.0 lakh.
The maximum amount of loan to a beneficiary will be limited to Rs. 25,000/- (Rupees Twenty Five Thousand only) per beneficiary.
NHFDC would provide 100% funding of the sanctioned projects.
- Interest and Rebate
a) Interest payable by the beneficiaries shall not exceed 5% per annum
b) The lending rate of NHFDC to the SCA will be 2% per annum.
c) The interest spread of 3% may be divided between the SCA and NGO as per their mutual agreement
d) A rebate of 1% per annum on interest will be admissible to women beneficiaries. In this case, the lending rate of NHFDC to the SCA will be 1% per annum.
e) In cases where the loan is directly extended by NHFDC to NGO, interest payable by the beneficiaries shall not exceed 5% per annum. However, in the case of women with disabilities the interest payable by them to the NGO shall not exceed 4% per annum. The lending rate of NHFDC to the NGO will be 2% per annum. A rebate of 1% would be allowed in the case of women beneficiaries with disabilities and in that case, the lending rate of NHFDC to the Non-Government Organisation shall be 1%
Eligibility Criteria of Beneficiaries –
a) Any Indian Citizen with 40% or more disability
b) Annual income below Rs. 2,00,000/- p.a. for urban areas and Rs. 1,60,000/- p.a. for rural areas
c) Age between 18 and 60 years
d) The borrowers already covered under any other scheme of financing sponsored by Central or State Government or financing institutions and having outstanding loans against their names shall not be eligible
e) The borrowers should preferably be regular member of Thrift and Credit Group (Self Help Group).
f) Preference will be given to women beneficiaries
g) Relevant educational/technical/vocational qualification, experience and background.
Eligibility Requirement of NGO –
a) The applicant NGO should have been registered for at least three years and it should have good reputation
b) An NGO intending to implement Micro Credit Scheme should have the objective of serving the social and economic needs of the weaker sections or the Persons with Disability.
c) It should have the necessary flexibility, professional competence and basic financial management capability and organisation skills to implement the lending programme. It must have out reach services in the operational areas.
d) Its office bearers should not be elected members of any political party.
e) It should have a proper system of maintaining accounts. Accounts should have been audited. There should not have been any serious irregularities observed in the audit, and its accounts should be published
f) It should be running on sound lines and preferably have experience of Thrift and Credit administration of at least three years and its recovery performance during the last three years should be approximately 90% or more.
Security
I. Fund under Micro Credit Scheme will be released only to those SCAs who have executed the General Loan Agreement and provided adequate Block Government Guarantee
II. The SCA will obtain the minimum guarantee from the NGO i.e. 25% of the total sanctioned amount pledged as FDR or 40% of the sanctioned amount as collateral security
III. Where the loan is extended by NHFDC directly to the NGO, it would be required to deposit an amount equal to 25% of the total sanctioned amount pledged as FDR or 40% of the sanctioned amount as collateral security with NHFDC
Financing Patterns –
NHFDC would provide 100% of the project cost to the SCAs for disbursement to the NGOs.
Utilisation of Loan and Refund of Un-utilised Loan –
I. The SCAs to which funds have been sanctioned can make the drawl of funds as per requirement within the credit limit sanctioned, which generally will be for one year.
II. The first drawal will be made not later than one month from the date of sanction unless the limit is extended by the NHFDC. If the lending operations are not so commenced, the NHFDC will be at liberty to cancel the sanction or vary any of the terms and conditions.
III. The funds made available to an SCA are to be utilised within a period of 90 days from the date of release of funds. The SCAs will be required to submit the utilisation of funds in the prescribed format. The funds remaining unutilised due to any reason, will be required to be refunded within a fortnight on expiry of utilisation period indicated in the sanction letter.
IV. Unutilised funds, if not refunded to NHFDC within due date, the same shall be charged with penal interest @ 3% p.a. over and above the normal rate of interest for next 90 days from the expiry of last date of utilisation period. Thereafter, the unutilised amount shall carry additional penal interest @ 2% per annum till the date of refund.
V. In cases, where the loan is extended by NHFDC directly to the NGO, the funds made available to the NGO are to be utilised within a period of 30 days from the date of release of funds and utilisation report in the prescribed format will be submitted by the NGO to NHFDC immediately thereafter. Funds remaining unutilised due to any reason, will be required to be refunded within a fortnight on expiry of utilisation period (30 days as stated above).
Funds remaining unutilised, if withheld by the NGO beyond the due date of refund of such funds, will be charged with penal interest @ 3% p.a. over and above the normal rate of interest for next 30 days from the expiry of the last date of utilisation period. Thereafter, the unutilised amount shall carry additional penal interest @ 2% per annum till the date of refund.
Repayment –
Term loans drawn from NHFDC will be required to be repaid within a period of 36 months in quarterly installments. The installments of term loan and interest shall be repayable to NHFDC on 30 th June, 30 th September, 31 st December and 31 st March every year or on such other dates as agreed to by NHFDC. Six days grace period will be admissible for payment of any installment to NHFDC
Liquidated Damages –
Defaults in the repayment of NHFDC dues (principal as well as interest) shall attract liquidated damages @ 2% p.a. over and above the normal rates of interest
Grant for promotion/training –
A grant of Rs. 2,000/- for every block of loan amount of Rs. 1.0 lakh, will also be provided by NHFDC to the NGO for training, orientation/ motivation of the beneficiaries, capacity building and organizing SHGs, awareness creation and administrative expenses. There will be no ceiling of the amount of grant to an NGO
Books of Accounts/Inspections
The SCAs shall maintain separate accounts in respect of the funds provided by NHFDC. The SCAs should also inspect the beneficiaries of the NHFDC under Micro Credit Scheme and submit the quarterly progress report. Any other information required will also to be submitted as and when requested
Procedure for Obtaining Loan –
The SCAs desirous of implementing the Micro Credit Scheme (MCS) to further provide loan to individual, Self Help Groups through Non Government Organisations
I. Under the scheme, the NGOs will apply to the respective SCA (State Channelising Agency). However, in exceptional cases, the NGO (Non-Government Organisation) may apply directly to NHFDC for sanction and release of loan.
II. The NGOs will submit their application for loan under Micro Credit Scheme to the SCA in the prescribed application form alongwith all relevant details and documents.
III. The SCA will scrutinise and verify the credential of NGO and satisfy itself regarding the suitability of the NGO for implementation of Micro Credit Scheme and its capacity to handle number of beneficiary vis-à-vis the amount of fund.
IV. The SCA may sanction loan upto Rs. 2.0 lakh to an NGO for further financing to Self-Help Group (SHGs) of disabled persons or beneficiaries
V. The application of an NGO for a loan amounting to more than Rs. 2.0 lakh (Rupees Two Lakh only) will be scrutinized by the SCA and forwarded to NHFDC for sanction with due recommendation and credential verification report of the NGO.
VI. In the case where the NGO submits application for financial assistance directly to NHFDC, the followings would be applicable
§ C.M.D., NHFDC will satisfy himself that there are enough grounds to treat the case as an exceptional case.
§ Credentials of the NGO would be verified in such manner as C.M.D. NHFDC may think fit
§ Suitability of the NGO for implementation of Micro Credit Scheme shall be examined and the decision of C.M.D., NHFDC in this regard shall be final.
§ In case loan assistance is sanctioned to NGO, NGO would have to accept the terms and conditions of sanction and convey the same to NHFDC...
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Source: National Handicapped Finance and Development Corporation Website