Financial Assistance – Public Sector Banks

(A NOTE CONTATINING THIS SCHEME HAS BEEN FORWARDED BY THE DEPARTMENT OF ECONOMIC AFFAIRS, VIDE D.O.No.F.301/89-SCT (B) DATED 8.9.89 TO THE MINISTRY OF WELFARE)

Under the Scheme for Public Sector Banks for Orphanages, Women’s Homes and Physically Handicapped Persons’, the benefits of the differential rate of interest are available to physically handicapped persons as well as institutions working for the welfare of the handicapped. The details of the scheme are as under :

ELIGIBILITY (For Individual)

Physically handicapped person are eligible to take loans under the scheme, if they satisfy the following conditions :

Should be pursuing a gainful occupation.

1. Family income from all sources should not exceed Rs.7200/-p.a. in urban or semi-urban areas or Rs.6400/- p.a. in rural areas.
2. Should not have land holding exceeding 1 acre if irrigated, and 25 acres if un-irrigated.
3. Should not incur liability to two sources of finance at the same time.
4. Should work largely on their own and with such help as other members of their family or some joint partners may give them and should not employ paid employees on a regular basis.

ELIGIBILITY (For Institutions)

Institutions for the physically handicapped persons pursuing a gainful occupation are also eligible to take benefit under this scheme. The above institutions are exempted from income criteria. However, these institutions could utilize the funds for productive purposes only and not for meeting their normal administrative and establishment expenses.

NB : PUBLIC SECTOR BANKS REFER TO NATIONALISED BANKS. THE STATE BANK OF INDIA AND ITS SUBSIDIARIES.

ASSESSMENT :

The quantum of loan, both for working capital and for acquisition of fixed assets, will be determined on the basis of the needs of institutions/individuals in a scientific method to ensure that all their legitimate financial requirements are met in toto.

AMOUNT OF LOAN :

The amount of loan will depend on the particular scheme proposed to be financed. It should be adequate to enable the borrower to finance his requirements without having to borrow funds from other sources. The normal limit will be Rs.6,500/- for working capital loan and Rs.5,500/- for a term loan. In exceptional cases, particularly for institutions etc., higher amounts are allowed. Both the working capital and term loan are admissible in accordance with the specific requirements of the borrower.

In the case of small scale industries, village artisans etc., in decentralized sector advances under the scheme may be granted upto Rs.6,000/- without making any distinction between working capital and term loan by way of composite loan.

Repayment : Term for the acquisition of fixed assets are normally allowed for 5 years, including a grace period not exceeding two years on the repayment of principal. The repayment schedule will be working out in each case having regard to the nature of the activities of the borrower and the economics of the scheme. In assessing the surplus for the payment of interest and principal, due allowance is made for the sustenance requirements of the borrower himself.

Security : The borrower may or may not be able to offer tangible security to secure the loan. The viability or the potential viability of a project will be the main criterion for the grant of an advance. However, the assets purchased with the loan may be hypothecated to the Bank. In addition, in appropriate cases of loans to a homogeneous group of borrowers group guarantee may be accepted.

Margin : In the case of borrowers belonging to the weakest strata of society who may not be in a position to furnish margin money, requirements of margin money will not be insisted upon.

Rate of interest : Keeping in view the social objective the interest will uniformly be charged @ 4 per cent per annum. Physically handicapped persons including blind eligible under DRI scheme are also given loans for purchasing of artificial limbs, hearing aids, wheelchairs etc., subject to maximum of Rs.2500/- per borrower provided such assistance is given along with the advances for productive activities and self employment ventures and all other requirements under DRI Scheme are fulfilled.

Under the scheme of ‘Financing Small Scale Industries’ a special provision has been made to allow concession of ½% in the rate of interest to the physically handicapped availing working capital limit above Rs.2500/- and upto Rs.2.0 lakhs.

Repayment period and interest on working capital stipulated as under :

source : http://www.india.gov.in/outerwin.php?id=http://rehabcouncil.nic.in/olink/rights_privileges2.htm#finance