The Government Information Center

Small & Medium Scale Loans


This loan scheme provides an opportunity to obtain loans on a simplified methodology for small & medium industry holders who are facing financial difficulties. The main feature of this scheme is the ability to obtain loans under minimum / soft collateral with low interest rate up to Rs.1 mn. (Loan application will be issued after confirming the project with the applicant)
 

Eligibility of the Borrower
The borrower should:

• Be above 18 years and less than 55 years and should have capacity to enter into an agreement with the Bank
• Have maintained Door to Door Savings Account with regular deposit for at least 12 months.
• Be the owner of micro –enterprises and have a business place of his/her own in a premises or in a rented –out premises
• Have a good character

Applicant
In the event the applicant is married, a joint application with spouse should be obtained.

Purpose
Facility may be considered for the following purposes.

• Working capital requirement
• Modernization of the enterprise
• Purchase of equipments for the business
• Purchase of motor cycles/ 3 wheeler / motor vehicle / two wheel tractor which support the core –business.

Quantum of Loan
Upper Limit is Rs.500,000/-

However, the upper limit is subject to the nature of business, the purpose of the loan, the repayment capacity, the total deposit made to Door to Door account and the value of the securities to be offered.
 

Rate of Interest

The rate of interest is 19% per annum. A concessionary rate of 15% per annum (1.25% per month) with a 4% rebate is applied for repayment on due date.

Maximum Repayment Period
36 months

Mode of Repayment
The borrower should agree to settle the loan and interest in equal monthly installments. Required funds should be available in the Door to Door Savings accounts, on the due date.

Securities
The Bank does not provide facilities to customers with the intention of disposing their assets to recover the loan. However, securities are needed to resort to recovery as final alternative in case the facility is not repaid.

Loan below Rs.100,000/-

• 2 guarantors should be a permanent employee of a government or a corporate body. The salary / income of the guarantor should be over Rs.15000/- p.m. every effort should taken to obtain guarantors who have permanent employment. If the guarantor is not a permanent employee his/ her income / standing should be ascertained by an inspection. (the guarantor should have the capacity to repay the loan)
   
• An assignment of loan protection insurance policy to be obtained through the Bank from the recognized insurance company ( this condition may be waived on the discretion of the loan approving officer)

Loan above Rs.100,000/-

• 2 guarantors with the absolute ownership of a motor cycles/ 3 wheeler / motor vehicle / two wheel tractor where the value is 125% value of the Loan.

• If the prospective borrower deposit a substantial amount to the “Door to Door” account daily, has sufficient wealth, stability and the prospective guarantors have substantial income, the loan approving officer at his discretion may allow the loan above Rs.100,000/- on guarantors.
• Other acceptable security viz life insurance policy/ share certificates may be considered as collateral by the approving officer.