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For WC & TL requirement of the weaver
Objective
The Handloom Scheme aims at providing adequate and timely assistance from the Bank to the weavers to meet their credit requirement i.e. for investment needs as well as for working capital in a flexible and cost effective manner. The Scheme will be implemented both in rural and urban areas.
Nature & extent of Loan
- Cash Credit limit – Minimum Rs 0.50 lakh and for silk weaving minimum Rs 1.00 lakh. Maximum up to Rs.5.00 lakh
- Term Loan Limit – Maximum Rs 2.00 lakh
- Comprehensive (WC+TL) :Maximum Rs 5.00 lakh
Insurance cover
Insurance cover may be arranged by the bank for the assets financed as per existing norms cost to be borne by the beneficiary and to be debited to his loan account.
Subsidy to be provided by Govt.
- Interest subsidy – to provide loans at the interest rate of 6% to handloom sector. The quantum of interest subsidy to be borne by the GOI will be limited to the difference between the actual rate of interest as applicable/ charged by the Bank and 6% interest to be borne by the borrower.The maximum interest subvention would be capped at 7%. Interest subsidy as applicable will be provided for maximum 3 years from the date of first disbursement. Interest subsidy will be credited to the account of the borrower on monthly basis. And
- Margin money assistance @20% of the project cost subject to a maximum of Rs.10,000/- per weaver will be provided, which will enable the handloom weavers to leverage this amount for borrowing loans from the banks. Margin money subsidy will be credited to the account of borrower after sanction of the loan .And
- Annual Guarantee Fee (A.G.F.) of CGTMSE (All accounts should be covered under CGTMSE)- The credit guarantee fee due on part of beneficiary will be paid by Ministry of Textiles.
Note: Interest subsidy and credit guarantee assistance will be provided for maximum 3 years from the date of first disbursement.
Security
- Principal: Hypothecation of assets i.e. raw material, work in progress (W.I.P), finished goods,equipments.plant & machinaries,Book debts etc., created out of bank loan & margin.
- Collateral:The loans must be covered under Credit Guarantee Scheme of CGTMSE /CGFMU
*Terms & Conditions apply. For further details, Please contact your Nearest Branch
New & Existing handloom weavers involved in weaving activity.
Margin
20% of project cost. Ministry of Textile - GoI to bear margin @ 20% of project cost with a maximum of Rs.10,000. Balance margin money amount to be borne by borrower.
Assessment of loan
- Working capital: WC limit be assessed by simplified turnover method (i.e. Bank finance will be 20% of turnover & 5% of turnover will be the margin). The Working Capital limit by way of Cash Credit is expected to be utilized as a revolving Cash credit and will provide any number of withdrawals and repayment within the limit.
- Term loan: Need based term loan to be extended to acquire assets like tools,equipments,accessories,machinaries etc for carrying out weaving activities. The Term Loan will be repayable in monthly or quarterly installments within 3 to 5 years depending upon the project profitability/repayment capacity of the borrower, over & above the gestation period upto 06 months.
Renewal/ Review of WC limits
Renewal/ Review of Credit Facilities will be done annually.
Issue of Card (For availment of Cash Credit account)
- For loans upto Rs 0.50 lakh To be disbursed by way of MUDRA Card
- For loans above Rs 0.50 lakh Amount will be disbursed by way of opening regular CC account. The beneficiaries under the scheme will be issued with a RUPAY Card having the daily limit of Rs.25000/- per day or as per the extant guidelines of the bank in respect of card limit and daily withdrawal limit
Validity period of limit
The limit sanctioned will be valid for 3 years, subject to annual review by the bank, based on genuine trade transactions and satisfactory track record. After 03 years the Credit facilities may continue but no subsidies/subvention will be provided by the government.
*Terms & Conditions apply. For further details, Please contact your Nearest Branch
As applicable to Micro Enterprises
| Sanction Limit | |
|---|---|
| 0.50 lakh to less than 2 lakh | 1Yr RBLR+BSS+CRP(1%) |
| 2 Lakh to upto 5Lakh | 1Yr RBLR+BSS+CRP(2%) |
Disposal of loan application
Maximum time schedule as per the amount of the proposals under MSME advances is as under:
| Credit Limits | Time schedule (maximum) |
|---|---|
| Upto Rs.2 lakh | 2 weeks |
| Above Rs.2 lakh & upto Rs.5 lakh | 4 weeks |
Credit Risk Rating
No credit rating, since maximum credit limit proposed is below Rs 5 lakhs
Other terms & conditions
- All accounts should be sanctioned subject to satisfactory report from CIBIL [Credit Information Bureau (India) Limited]
- Sale proceeds of goods supplied to Government Departments by all the Handloom weavers routed through their accounts to keep the accounts in order.
*Terms & Conditions apply. For further details, Please contact your Nearest Branch
Methodology for release of funds
For Branches:
- Margin money subsidy: After sanction of loan, financing branches will calculate and claim the tentative amount of margin money subsidy from Head Office/nodal branch in advance. After receiving the subsidy the account may be disbursed and the subsidy will be credited in the loan account of the Borrower.
- Interest subsidy: Financing Branches will calculate the interest subsidy and send the claim of the said amount with the details of the borrowers covered under the scheme on monthly basis to nodal branch/head office through their respective zonal offices within seven days from the end of the month. Interest is to be served by borrowers as and when charged in the account and upon receipt of the subsidy amount, the account will be credited.
- CGTMSE fees: After sanction of loan, financing branch will debit the CGTMSE fees to the account of the borrower and pay the CGTMSE fees through respective Zonal Offices. Then financing branch will send the claim of the said amount with the details of the borrowers covered under the scheme on quarterly basis to nodal branch/ Head Office through their respective Zonal Office within 7 days of end of respective quarter.
For Nodal Branch/ Head Office:
- Margin money subsidy: Tentative amount of fund for payment of margin money subsidy will be claimed by bank in advance which may be credited to dedicated account for receiving advance for the margin money subsidy under Weaver Mudra Scheme Management Information System (MIS) or data related to the no. and amount of the borrower (along with other required information) covered under the scheme will be sent to the Ministry of Textile on monthly basis. Unutilized fund will be refunded to the Ministry accordingly.
- Interest subsidy: Similarly, a dedicated account will be opened for holding this fund received and claimed from Ministry in advance. Management Information System (MIS) or data related to the no. and amount of the borrower (along with other required information) covered under the scheme will be sent to the Ministry on monthly basis. Unutilized fund will be refunded to the Ministry accordingly.
- CGTMSE fees: Like as in above subsidies, a dedicated account will be opened for holding this fund received and claimed from Ministry in advance. Management Information System (MIS) or data related to fees charged by CGTMSE in case of weaver borrowers (along with other required information) covered under the scheme will be sent to the Ministry on monthly basis. Unutilized fund will be refunded to the Ministry accordingly.
Formula for calculation of Financial assistance:
- Margin money per borrower – 20% of loan amount and maximum Rs.10000/-.
- Interest subsidy per account – Actual Interest Charged in the account, minus 6%.
- CGTMSE fees: As per extant guidelines of CGTMSE
*Terms & Conditions apply. For further details, Please contact your Nearest Branch
Loan application and documentation
- Similar to Mudra Card Scheme or as per extant guidelines. Stock statements and financials are required to be submitted by borrower for loans above Rs.2 lakh.
- Original Bills/Invoices to be submitted in case of Term Loan, for any purchase of equipment/machineries.
*Terms & Conditions apply. For further details, Please contact your Nearest Branch
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