Micro Financing Scheme of NHFDC
Micro Financing Scheme of NHFDC
The Department of National Handicapped Finance and Development Corporation (NHFDC) has been set by the Indian Government to promote economic and development activities undertaken by persons with disabilities. Under the NHFDC department, micro-financing scheme for economically weaker section of the disabled persons was developed to support them financially for augmenting income generation activities. In this article, we look at the Micro Financing Scheme of NHFDC in detail.
Purpose of the Loan
The purpose of Micro Financing Scheme is to provide financial assistance to the economically weaker section of the disabled for starting income-generating business activities. The list of income generating activities are given below:
- Small business or trade
- Tiny/cottage industry or service activity
- Artisan activities
- Agricultural and allied activities
- Transport sector activities
The eligibility criteria of an individual to apply for Micro Financing scheme are listed below:
- The applicant should be a permanent resident of India.
- The applicant should possess the minimum degree of disability with 40% or above.
- The applicant age limit should be above 18 years at the time of applying for this scheme.
- The applicant should possess a relevant educational qualification, experience and background.
- The applicant should be a regular member of any of the Self Help Groups (SHG).
The eligibility criteria of NGO for implementing the microfinance scheme are as follows:
- The NGO should have been registered for at least 3 years, and it should have a good reputation.
- The NGO implementing the Micro Credit Scheme should have the objective of aiding the economic and social needs of the weaker sections or the persons with disability.
- The NGO should have necessary flexibility, professional competence and basic financial management capability and organisation skills to implement the lending programme.
- The NGO should have a proper system of maintaining accounts, and the accounts statement should have been audited.
Quantum of Loan
The maximum amount of loan can be obtained under the Micro Financing scheme is Rs. 10 Lakhs.
Procedure for Obtaining Loan
The NGO/SHG intending to implement Micro financing scheme through the State Channelising Agency (SCA) has to follow the below mentioned procedure.
- The application has to be proposed by the NGO to the respective SCA in prescribed application form along with relevant details and documents.
- The SCA will verify the application and credentials of NGO regarding the suitability of the NGO for implementation of the Scheme.
- The SCA will sanction the loan amount of up to Rs. 2 lakh to an NGO for funding additionally to Self Help Groups (SHGs) of disabled persons or beneficiaries.
- The SCA will verify the application of an NGO for loan amount more than Rs. 2 lakh and forwarded to NHFDC for sanction with due recommendation and credential verification report of the NGO.
In the case where the NGO submits an application for financial assistance under the scheme directly to NHFDC, the following process has to be performed:
- The NHFDC would verify the NGO Credentials with respect to the suitability of the NGO for implementation of Micro Credit Scheme will also be examined for the final approval.
- The loan amount will not be released to the NGO unless the NGO accepted the terms & conditions of sanction and convey the same to NHFDC.
The general loan agreement has to be signed, and the government guarantee has to be provided as the security to grant fund under the micro-financing scheme. The loan released by NHFDC directly to the NGO is required to deposit an amount equal to 30% of the total sanctioned amount or bank guarantee for 30% of the loan amount.
The loans obtained from NHFDC will have to be repaid within 2 years in instalments. The instalments of loan and interest repayable to NHFDC will be on 30th June, 30th September, 31st December and 31st March or on any other dates as agreed to by NHFDC. Further, the grace period of 6 days will be provided for payment of any instalment to NHFDC.
- The proposed rate of interest charged under the micro-financing scheme will be at the rate of not more than 5% per annum.
- The lending rate of NHFDC to the State Channelising Agency (SCA) will be 2% per annum.
- The interest rate of 3% will be shared between the SCA and Non-Governmental Organization (NGO) as per their agreement.
- In cases where NHFDC directly extends the loan to NGO/SHG, interest payable by the beneficiaries will not exceed 5% per annum.
A rebate of 1% per annum on the interest rate will be given to women applicants. Additionally, a rebate of 0.5% per annum on the interest rate will be given to the person with disabilities.
Grant of Training
A grant of Rs. 2,000 for every loan amount of Rs. 1.0 lakh, will be provided by NHFDC to the NGO for training the beneficiaries, organising SHGs, awareness creation and administrative expenses.
Books of Accounts
The SCA/NGO has to 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.