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Bank Loan Processing Reimbursement Scheme

Scheme for MSMEs – Reimbursement of Loan Processing Fee

Scheme for MSMEs – Reimbursement of Loan Processing Fee

Access to finance is a significant factor affecting the success of MSE and loan processing fee charged to a potential borrower by various banks is an issue faced by MSE. Accordingly, the Government has decided to provide financial support to SC/ST owned MSEs under the Bank Loan Processing Reimbursement Scheme to enhance the participation rate of MSE in public procurement. In this article, we will have a look at the Scheme for Reimbursement of Loan Processing Fee in detail.

Objectives of the Scheme

Bank Loan Processing Reimbursement Scheme aims to offer financial assistance against the processing fees charged by the Scheduled Commercial Banks for sanctioning and availing of business loans (both against fund and non-fund based limits), exclusively for SC/ST micro and small enterprises (MSEs). The overall objective for offering this assistance is to achieve the procurement target of 4% set aside for SC/ST MSEs under the public procurement policy:

  • To enhance the marketing capabilities and competitiveness of SC/ST MSEs
  • To update the MSE enterprises about the prevalent global market scenario
  • To showcase MSEs competencies
  • For providing a platform for interaction with large institutional buyers

Prescribed Authority

The National Small Industries Corporation (NSIC) is the nodal agency for implementation of Bank Loan Processing Reimbursement Scheme.

Reimbursement of Bank Loan Processing Fee

Bank Loan Processing Reimbursement Scheme will provide reimbursement of processing fees charged by the FIs for sanctioning and availing of business loans (both against fund and non-fund based limits) to SC/ST MSEs.

The assistance under this scheme will be released from NSSH funds and will be limited to 50% or Rs.10000 (excluding GST and all other applicable taxes), whichever is less on processing the fees charged by the bank, only after availing of business loan.

Note: The reimbursement can be availed multiple times in a financial year by SC/ST MSEs.

Eligibility Criteria

The eligibility criteria for availing the reimbursement of bank loan processing charges are explained in detail below:

  • All SC/ST MSEs can avail the benefits under the scheme upon submission of relevant documents. The following definition is applicable for recognizing the SC or ST MSEs.
  • In case of proprietorship firm, the proprietor should be from SC or ST Category
  • In case of partnership firm, the SC or ST partners should be holding at least 51% of shares in the unit
  • For private limited companies, at least 51% shares should be held by SC or ST promoters
  • Only SC, ST MSEs having the Udyog Aadhaar Memorandum number (UAN), PAN and registration under Goods and Service Tax (GST) are eligible to avail this scheme.

Note: In case the unit has not provided GST number, self-declaration for the same with reason should be provided by the unit.

Financial Institution Criteria

Only SC, ST MSEs that avail loans from the any Scheduled Commercial Banks will be considered under this scheme where the loan processing fee is being charged by such banks.

Timeline for Submission of Claims

The applicant has to submit the claims within 45 days from the date of the sanctioned loan amount. Once the claim is submitted the NSSH office will conduct due diligence and accordingly, reimbursement will be made to each applicant by NSSH office within 45 days from the receipt of application form subject to the submission of all required

Time Period

Bank Loan Processing Reimbursement Scheme is valid till the existence of the National SC/ST Hub (NSSH) Scheme or until further orders the Ministry of MSME.

Documents Required

The documents required for the Bank Loan Processing Reimbursement Scheme is listed as follows:

  • Self-certified copy of UAM and GST
  • Self-attested copy of PAN card – In case of proprietorship, PAN card of SC/ST proprietor ought to be submitted
  • Copy of Caste certificate of the proprietor, all partners and directors
  • Details of shareholding in case of partnership, private limited and LLP firm.
  • In case of partnership concerns, the shareholding of the enterprises will be required to ascertain the status of the MSME
  • Copy of Partnership deed for partnership firm
  • Memorandum of Article of Association in case of LLP, Private limited company, is required.
  • Bank attested debit statement with bank loan processing charges mentioning loan number and applicant MSE’s name, valid payment receipt, original receipt of bank loan processing fee paid by the applicant and system-generated GST invoices.
  • Business loan detail certificate and disbursement certificate
  • Bank attested copy of loan sanction letter
  • Cancelled cheque of the current account of the enterprises from which bank loan processing charges have been debited
  • Proof of transferred amount as reimbursement by NSSHO, NSIC through PFMS under this scheme

Application Procedure

The application procedure for the Bank Loan Processing Reimbursement Scheme is explained in detail below:

Submission of Claims

After obtaining the sanctioned loan, the applicant has to approach the nearest NSSH office for claiming the reimbursement of processing fees charged by the FIs with dully prescribed application form along with all documents.

Application

Due Diligence by NSSHO

  • In-depth evaluation of the application in terms of documentation will be conducted by the respective officer at NSSHO.
  • In case of any discrepancy, clarification will be sought from the applicant and bank appropriately.
  • Applications with incomplete documents will not be acceptable.

Submission of Documents to NSSH Cell

Post evaluation by NSSHO, proposals of all applicants in the prescribed format will have to be submitted to NSSH cell at NSIC head office for approval.

Final Approval on Reimbursement

  • Based on the evaluation of conducted by NSSHO, the consolidated proposal will be formulated by the NSSH Cell and NSIC head office, to Screening committee headed by Director-NSCI and having officials from Ministry of MSME, NSSH Cell and Finance Division of NSIC as members, for consideration.
  • The proposal duly recommended by the screening committee will be forwarded to the CMD-NSIC for approval.

Payment of Reimbursement Amount

The reimbursement amount will be transferred to the applicant’s bank account, where the processing fees charged by the FIs, directly through the Public Financial Management System (PFMS) by the respective NSSHO/NSSH Cell.

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