Interest Subsidy Eligibility Certificate (ISEC) Scheme

The Interest Subsidy Eligibility Certificate (ISEC) Scheme was introduced by the Khadi and Village Industries Commission (KVIC) to mobilize funds from banks at a subsidised rate to meet the working capital requirement of the registered khadi and village industries producing khadi products. In this article, we look at the Interest Subsidy Eligibility Certificate (ISEC) Scheme in detail.

Benefits of the ISEC Scheme

The following are the benefits that can be availed under this ISEC scheme.

Under the ISEC Scheme, credit at the concessional rate of interest is made available as per the requirement of the institutions.
The institution is required to pay only 4% interest rate. In case, the rate of interest charged by any banks is above 4% that will be paid by the Central Government through KVIC.
All khadi institutions registered with the KVIC or State Khadi and Village Industries Boards (KVIBs) can avail of financing under the ISEC scheme.

Purpose of the ISEC Scheme

The main purpose of the ISEC scheme is to assist the registered Khadi sectors by filling the gap between the actual requirements of fund and availability of fund from the budgetary resources.

Eligibility Criteria

The industries that are eligible for Interest Subsidy Eligibility Certificate (ISEC) Scheme are explained below:

The Khadi institutions which hold the valid Khadi certificate and sanctioned khadi programme.
The Institutions registered with the Khadi and Village Industries Commission (KVIC) or State Khadi and Village Industries Boards (KVIBs).
The Co-operative Societies which is registered under the co-operative societies Act.
The trusts are created for public purposes that are charitable or religious.

Responsibilities of KVIC

The duties of KVIC are explained in detail below:

KVIC should take up the issue of adequate institutional finance with the Reserve Bank of India and National Bank for Agriculture and Rural Development (NABARD) on a priority basis and ensure that the Khadi and Village Industries (KVI) sector get the credit as per requirement.
KVIC should start a unique campaign and encourage its implementing agencies to obtain a credit rating from the notable agencies.

Note

The Khadi and Village Industries Commission will issue the Interest Subsidy Eligibility Certificate (ISEC) to the eligible entities as specified above. Upon the strength of these certificates, the eligible institutions may negotiate with the bank for financial assistance. However, the final decision to accept or reject any loan to the qualified borrower is vested with the bank. Claims should be computed on the loan amount indicated in the ISEC or actual availability of fund whichever is less based on the day to day transactions.

Issuance of IESC

The State Boards will issue the Interest Subsidy Eligibility Certificate in respect of institutions and societies registered under them should be signed by their C.E.O or Secretary or Executive Officer or Administrator.

How to Apply?

The Khadi institutions have to propose the financing bank for working capital along with the ISEC certificate provided by Khadi and Village Industries Commission (KVIC). Based upon the approval of working capital the financing bank will claim for the reimbursement to the nodal branch for the varying interest rate above and over 4%.