TMB Micro Entrepreneurs Scheme

As per the guidance of the RBI, the micro Entrepreneurs Scheme was initiated by the Indian Government under the Pradhan Mantri “MUDRA” Yojana. Through this scheme, TamilNadu Mercantile Bank Limited (TMB) intends to provide financial assistance to the micro manufacturing and service enterprises in rural, semi-urban and urban areas of the State. In this article, we look at the TMB Micro Entrepreneurs Scheme in detail.

Objective of the Scheme

The objective of the TMB Micro Entrepreneurs scheme is to satisfy the requirements of the micro-entrepreneurs under Pradhan Mantri ”MUDRA” Yojana.

Eligibility Criteria

The following eligible entities can apply for the micro entrepreneur’s scheme.

• Individual
• Proprietorship
• Partnership firm
• Micro-manufacturing or Service enterprises in rural, semi-urban and urban areas.

Quantum of Loan

The maximum amount of loan can be obtained under this scheme is Rs. 10 Lakhs. The following are the loan types that are covered under this scheme.

Shishu- Under Shishu the loans are covered up to Rs.50,000.

Kishore– Under Kishore, the loans are covered up to Rs. 5 lakhs.

Tarun– Under Tarun the loans are covered up to Rs. 10 lakhs.

Purpose of Advance

The purpose of advance is provided to meet the working capital or capex requirements of micro (manufacturing or service) enterprises.

Nature of Advance

The nature of advance granted by the TMB bank are as follows:

Term Loan – Term loan is given for the capex requirements.

Overdraft (Running / operative account)– Overdraft for working capital and this is renewable for every year.

Overdraft (Reducing balance method) – It also, serves for working capital and has to be renewed annually.

Form of Disbursement

In the case of the term loan, the payment has to be done either to the supplier of the asset funded by the bank or to the service provider.

The sanctioning authority may approve the account credit in the form of reimbursement of loan against the assets has already obtained.

In case of the term loan, where the assets are already acquired from alternative resources including own funds more than one year from the date of disbursement of the loan.

In such cases, end vouchers, receipt, self-declaration, self-declarations given by the borrower should be furnished with the certification of verification and availability of such assets by the branch head.

Repayment

Term loan or overdraft (reducing balance method) will be fixed based on the borrower income, and the repayment duration will be restricted to the maximum of eighty-four instalments.

Where Overdraft limit is permitted for the working capital requirement, the annual reduction schedule usually is distributed over the total repayment, depending upon the repayment capacity of the borrower.

Overdraft Limit

Before the due date, it has to be renewed once a year.

Security

The following are the securities required by the bank for lending the loan amount.

Primary Security: Hypothecation of stocks and assignment of receivables.

Collateral Security: The collateral security or third party guarantee of any person other than the partners is not required. At the same time, the loans approved under PMMY are to be included under Credit Guarantee Fund Trust for Micro and Small Enterprises. The loan approved to retail trade will not be included under CGTMSE scheme. For the loans more than Rs. 2 Lakhs, PAN is mandatory to cover under CGTMSE.

Margin

There is no overdraft for the requirement of working capital and the term loan for the capex is 20% of the important asset.

Financial Statements 

The financial statements are not required unless the business needs mandatory audit under any of the following facts:

• Repayment of the debt along with the interest has to be assessed by obtaining details of existing income as well as the projected income of the applicant.
• The sources of income should be verifiable such as business income, rental income, agriculture income and other income.

Rate of interest

The proposed rate of interest charged under the micro-entrepreneur scheme will be at the rate of 9.75%.

Penal Interest

Any irregularity or default in repayment will attract the penal interest of 1% per annum over and above the applicable rate of interest.

Processing Charges

Term Loans:The processing charge for the term loan will be 1.00% of the loan amount without any maximum cap and additionally with the applicable tax.

Overdrafts:The processing charge for the overdrafts will be 0.50% of the overdraft and without any maximum cap both for fresh sanctions and renewals.

Documents Required

The following documents are to furnished along with the application form of the scheme.

Application Form- A separate application form designed for the loan sanctioned under PMMY should be obtained from the applicant.

Business Plan- Copy of Business plan.

Identity Proof- Proof of Identities like PAN / Drivers License / Aadhaar Card / Passport and more.

Domicile Proof- Residence proof like recent telephone bill/electricity bill or property tax receipt and more.

Photograph- Applicant’s recent photograph less than six months old.

Quotation of Machinery- Quotation of machinery or other items to be purchased.

Machinery Details- Name of supplier or details of machinery or prices of machinery.

Business Details- Proof of identity/address of the business like tax registration, business license and more.

Caste Certificate- Proof of category like SC/ST/OBC/Minority, if applicable.

Note: All the above Terms and Conditions are subject to change, and sanctioning of the loans is at the discretion of the Bank. Goods and Service Tax (GST) on All Service Charges extra wherever applicable.