The entrepreneurs of the State, more particularly the 1st generation entrepreneurs are facing problems to convert their ideas into reality due to lack of adequate resources in the form of equity, loan, etc. Getting a loan or financial assistance from Bank/Financial Institutions for any new venture is a major problem in the State as Banks/Financial Institutions are very reluctant top provide loan considering it as a risk for them.
To remove this hurdle of equity /fund crunch, the State Government has proposed to launch a new scheme called Chief Minister's Start-up fund “Sarothi” with an initial amount of Rs.10 Cr during 2016-17. The fund shall be managed by the Industries & Commerce Department as per its operational guidelines. The scheme shall be operational from the financial year 2016-17 and shall be valid for a period of five years.
Proposed guidelines of the scheme do not supplement the argument given above as it does not propose to give equity support, instant aimed at giving interest concession.
The objective of the scheme:
The basic objective of the scheme is to provide financial assistance in the form of a loan with Interest subvention through a designated Bank covering the whole of Assam. The loan so availed by the beneficiaries will be supported by the State Govt. through Interest Subvention @5% P.A.
The financial assistance has been proposed to be provided in the form of Interest Subvention on loan (Term Loan +Cash Credit) @ 5% P.A. initially through Assam Gramin Vikash Bank (AGVB) to applicant industries. Later on, the Government may bring in more banks under the purview of the scheme.
As Assam Gramin Vikash Bank doesn’t have it exist in the Hill Districts of the Assam viz, Karbi Anglong & Dima Hasao, DIC, Govt. of Assam shall arrange to rope in any other Bank for implementing the scheme in those Districts.
Coverage and Target group:
The coverage of the scheme shall be:
- All innovative start-up industrial activities and the new individual applicant shall be eligible to get the benefit under the scheme.
- New MSME units.
- Priority shall be given to the applicant having any kind of skill development training.
- The applicant should not be a defaulter of any Bank/ Financial Institution.
Role of the State Government:
- All new innovative start-up industrial activities and individual applicants for the new units shall be eligible for interest subvention on credit up to Rs. - 10.00 lakh.
- The funding of this Subvention will be met out of the fund parked at the escrow account to be specifically maintained at Assam Gramin Vikash Bank, Chandmari, Guwahati Branch.
- DICC shall finalize AGVB Branch wise/District-wise target for a financial year and communicate it to the AGVB Head Office and get it accepted by the bank before starting the process of selection of beneficiaries under the scheme.
- On receipt of the Application by DICC from the applicant, it shall be scrutinized by the official of DICC and placed before the District level Committee (DLC)constituted for approval.
- DLC shall include the Branch Manager of the Nodal Branch of AGVB in the district, who will be involved in the process of selection of beneficiaries under the scheme.
- On receipt of approval of the DLC, the proposal shall be forwarded to the concerned Branch/es of Assam Gramin Vikash Bank for sanction.
- The department of Industries &Commerce, Govt.of Assam shall participate in the joint inspection of the units financed under the scheme along with the bank officials of the financing branch periodically to ensure utilization of loan instalments before the release of the subsequent loan instalments to the beneficiaries to ensure the creation of asset and successful implementation of the scheme.
- The department of Industries &Commerce, Govt.of Assam shall assist the Bank in the recovery of loans sanctioned under the scheme and participate in the joint recovery drives, as and when requested by the Bank.
Financial Assistance & Equity:
- The loan amount shall be a maximum of Rs. 10.00 lakh.
- Equity/Promoter’s Margin shall be 15% of the project cost.
- All the beneficiaries under the scheme will be eligible for interest subvention on credit up to Rs.10.00 Lakhs.
- Banks will charge the borrowers as per their respective lending norms and 5% will be subverted in the loan accounts of the beneficiaries by the DIC, GOA based on claim prepared by the bank and submitted to the DIC, GOA. The balance interest calculated (@ Lending Rate of Interest levied on the loan amount disbursed minus 5%) will be repaid by the Borrower in Equated Monthly Instalment (EMI). The beneficiary who fails to meet his/her repayment obligations in time and the account becomes NPA, the benefits of interest’s subvention will not be available to them from the date of account becoming NPA. All other eligible beneficiaries shall continue to get the benefit of interest subvention for a maximum period of 5 years or the agreed term of the loan whichever is less.
- A Current Account (Escrow Account) shall be opened at AGVB, ChandmariBranch by DIC or parking of the fund “SAROTHI”– THE START-UP ASSAMreceived from the State Govt.
- The Bank will have the authority to debit the Escrow Account to realize the interest Subvention @5% due to the bank on the loan amount disbursed as on the last day of each quarter of the financial year.
- The Bank will not charge any processing fees/ documentation fees from the beneficiaries. The processing fees/ documentation fee shall be borne by DIC, govt. of Assam on behalf of the beneficiaries as per the extant guidelines of the bank or at a specified rate of 3% of the sanctioned amount as mutually agreed by the Bank and DIC, GOA. As such, the Bank will also have the authority to debit the Escrow Account to realize the one-time processing fees/ documentation.
- In order to avail, the Interest Subvention on credit up to Rs.10.00 Lakhs extended to the beneficiaries under the Scheme, all branches of the Bank across the State are required to submit their claims to the Head Office of the Bank for onward submission to the commission rate of Industries and Commerce, Assam on a quarterly basis as at June 30th, September 30th, December 31st and March 31st of the corresponding Financial Year. The claims for the last quarter of the Financial Year should be accompanied by a StatutoryAuditor’s Certificate (in original) certifying the claims of the Corresponding FinancialYear as true and correct. The Bank will submit Quarterly Utilisation Certificate indicating interest subvention amount transferred from the Escrow Account to the loan account of eligible beneficiaries as well as the number of processing fees/ documentation fees realised by the Bank from the Escrow account.