Pavala Vaddi MSME Scheme

The Pavala Vaddi scheme was introduced by Andhra Pradesh government (Finance Ministry) for interest subsidy on the bank loans received by the self-help groups in Andhra Pradesh. The scheme intends to reduce the financial burden for setting up of New Micro and Small enterprises in the state including Food Processing Industries. This Scheme applies to all loans extended by banks under SHG Bank Linkage Programme. In this article, we look at the Pavala Vaddi MSME Scheme in detail.

Benefits of Pavala Vaddi Scheme

The person applying for Pavala Vaddi Scheme can avail the benefits which are listed below:

The Pavala Vaddi scheme grants benefits in the form of interest subsidy on the Bank loan received by the self-help groups or micro and small enterprises.
Under Pavala Vaddi scheme the interest amount paid by the eligible micro and small enterprises to the financial institution or banks on the term loan availed will be reimbursed with a maximum limit of 9% on a half-yearly basis to the concerned financial institutions or bank.
The Pavala Vaddi scheme distributes the incentive will be in the kind of reimbursement of interest is above 3% of irrespective of bank interest rates and which does not include penal interest, liquidated damages etc., paid to the bank.
Under this scheme, benefits will be available to the eligible beneficiaries for a term of five years.

Eligibility Criteria

The applicant applying under Pavala Vaddi MSME Scheme should meet the following eligibility criteria:

New micro and small enterprises build up in the state of Andhra Pradesh other than the Municipal Corporation boundaries of Visakhapatnam, Vijayawada, and Hyderabad
The assistance will be extended only to the eligible new units which are promptly and regularly repaying the loan instalments of principal and interest.

Documents Required

The prescribed documents are to be furnished along with the application form. Identity Proof: Copy of government-issued Identity card such as Passport /PAN card/ Voter ID card / Driving License/Aadhaar, etc. Address Proof: Copy of government issued ID or recent utility bills. Photographs: Passport size photograph. Registration Number: Micro business registration number or organization number.

How to apply for Pavala Vaddi Scheme?

The applicant can have contact with the nationalise bank, e.g. Andhra bank Note: Bank will give detailed information about everything required for application and other queries.

Pavala Vaddi Scheme Process

The Pavala Vaddi Scheme consists of the following steps are explained below: Step 1: The DRDA will obtain the details of SHG repayment for interest subsidy twice a year through the Mandal Samakhyas. Step 2: The concerned officer of DRDA will calculate the Pavala Vaddi to be given to each SHG basing on the bank statement. The DRDA will give the Pavala Vaddi Cheques to the Mandal Samakhya along with the statement of particulars accruing to each SHG. Step 3: The Mandal Samakhya, in turn, will distribute the cheques to the SHGs through the Village Organisations in the Presence of non-officials.

Amount of Reimbursement

The reimbursable interest on the term loan is that portion which is more than 3% per annum and to a maximum reimbursement of 9% per annum.

Sanctioning Authority under the Scheme

The state level committee (SLC) or District level committee (DLC) will sanction and release the reimbursement of interest.

Mode of Reimbursement

The interest amount remitted by the eligible Micro and Small enterprises to the financial Institution/Banks on the Term loan availed will be reimbursed with a maximum limit of 9% on Halfyearly basis to the concerned Financial Institutions or Banks.