Credit Facilitation Through Bank
A Memorandum of Understanding has been entered by the National Small Industries Corporation (NSIC) with several public and private sector banks to provide credit to Micro, Small, and Medium Enterprises (MSMEs).
Credit support is arranged by the NSIC with the help of these banks.
Highlights & Benefits of Credit Facilitation Scheme
Some of the main highlights and benefits of the scheme are mentioned below:
- The security norms and interest rates vary from bank to bank.
- MSME units are provided with working capital in the form of bill discounting facility, overdraft against book debts, and open cash credit.
- Term loans are provided in order to set up new units. In the case of existing units, term loans are provided for diversification, modernisation, and expansion of the unit.
- Non-fund-based limits in the form of a foreign letter of credit, foreign bank guarantees, letter of credit, guarantees, etc. are provided.
- Handholding facility is provided to entrepreneurs. Documentation help is also provided by the scheme.
Documents Required for Credit Facilitation Scheme
Depending on the purpose of the loan, the list of documents that must be submitted will vary. The general documents that must be submitted are mentioned below:
- Identity proof
- Address proof
- Business address proof
- In case the business is at a leased or rented premise, the lease deed or rental agreement must be submitted
- Profile of the MSME unit
- Estimate balance sheet for the next 2 years
- In case the required amount is Rs.1 crore and above, CMA data in the required format must be submitted
- In the case of term loan requirements, the project format must be submitted.
- Certificated of Incorporation/Memorandum and Articles of Association/Rules & By-laws/Trust Deed/Partnership Deep
- Creditors, debtors, value of the stock, and the monthly sales and production data for the current fiscal year, etc.
- Asset and Liability Statement of directors, guarantors, promoters, etc., along with their updated income tax returns must be submitted
- Copy of the Entrepreneur's Memorandum/ SSI registration certificate
- Balance Sheet for the last three years along with the income tax returns
- Application form in the required format
- Details of accounts with the existing banks
- Sanctioned building plan/Quotations/Estimates, etc.
- Sanction from the Electricity Board and clearance from the Pollution Control Board must be submitted
FAQs on Credit Facilitation Scheme
- Who launched the Bank Credit Facilitation Scheme?
The scheme was launched by the National Small Industries Corporation (NSIC), a Government of India enterprise under the Ministry of MSME.
- What are the eligibility criteria for the Bank Credit Facilitation Scheme?
Any registered Micro, Small, or Medium Enterprise (MSME) that has already been registered is eligible to apply for the scheme.
- Are interest rates lower under the Bank Credit Facilitation Scheme?
Yes, loans provided under government-supported schemes usually have lower or competitive interest rates as compared to normal business loans.
- Do I require collateral to get a loan under the Bank Credit Facilitation Scheme?
Collateral depends upon the loan amount. Smaller loans schemes like the Mudra Loan Scheme may not require any collateral. But higher loan amounts may require security based on bank policies.
- What is the process after submitting a loan application for the Bank Credit Facilitation Scheme?
After submitting the application, the bank verifies your documents, analyzes your financial health, determines risk, and decides loan terms. NSIC may assist during this stage if bank need any clarifications or additional information.
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