Laghu Udhyami Credit Card (LUCC)
Laghu Udhyami Credit Card scheme provides loan for MSME to meeting working capital requirements. The Laghu Udhyami Credit Card scheme is available in a wide variety of banks and can be applied for by eligible borrowers.
Under the Laghu Udhyami Credit Card scheme, all existing small borrowers – micro and small enterprises including artisan, village industries, professionals and self employed personnel are eligible. Retail traders are also eligible for the LUCC scheme.
Further, eligible borrowers must have a satisfactory track record of dealing with banks for the last three years. Applicants dealing with banks for the last three years, but not having any loans are also eligible for the scheme.
Amount of Loan
Under the Laghu Udhyami Credit Card scheme a loan of upto Rs.10 lakhs is provided for a period of three years, subject to annual review. The loan is provided without any collateral whenever CGTMSE cover is available to eligible MSME units. In some cases, a third party guarantee may be required. The stock and receivable crated out of loan would be treated as primary security and insurance cover must be taken on the primary security created.
Further, monthly stock statement and detailed annual stock statement must be submitted by the borrower for the stocks and receivables created out of the Laghu Udhyami Credit Card, if the loan amount sanctioned in above Rs.2 lakhs. For loan less than Rs.2 lakh, no stock statement need to be submitted.
Margin & Rate of Interest
The loan of upto Rs.25000, no margin is required. For any loan above Rs.25,000, a margin of 25% is required.
The rate of interest for Laghu Udhyami Credit Card is as follows:
Upto Rs.50,000 – 10.50% to 11.50%
Rs.50,000 to Rs. 2 Lakhs – 12.5% to 13%
Above Rs. 2 Lakhs to Rs. 10 Lakhs – 12% to 15.75%
In addition to the above rate of interest, processing charges maybe levied on the loan as per the bank guidelines.