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					                                 INDEX

POLICY SECTIONS   SECTION                                          SECTION
                  NUMBERS           PROCEDURE SECTIONS             NUMBERS

                             GOVT. SPONSORED LOAN SCHEMES
                                                                    725.1
                            GOVT. SPONSORED LOAN SCHEMES - PMEGP
                                                                    725.2
                            GOVT. SPONSORED LOAN SCHEMES -SGSY
                                                                    725.3
                            GOVT. SPONSORED LOAN SCHEMES -SJSRY
                                                                    725.4
                             GOVT. SPONSORED LOAN SCHEMES -DRI
        DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1      PAGE    01
SIB                   Government Sponsored Loans - PMEGP                        September 11
No.   SS CLK AM MGR                            PROCEDURE NARRATIVE
                      The Scheme:
                      Government of India has introduced a new credit linked subsidy
                      programme called Prime Minister's Employment Generation Programme
                      (PMEGP) by merging the two schemes that were in operation till
                      31.03.2008 namely Prime Minister's Rojgar Yojana (PMRY) and Rural
                      Employment Generation Programme(REGP) for generation of
                      employment. PMEGP will be a central sector scheme to be administered
                      by the Ministry of Micro, Small and Medium Enterprises (MoMSME).
                      The Scheme will be implemented by Khadi and Village Industries
                      Commission (KVIC), a statutory organization under the administrative
                      control of the Ministry of MSME as the single nodal agency at the
                      National level. At the State level, the Scheme will be implemented
01                    through State KVIC Directorates, State Khadi and Village Industries
                      Boards (KVIBs) and District Industries Centres (DICs) and banks. The
                      Government subsidy under the Scheme will be routed by KVIC through
                      the identified Banks for eventual distribution to the beneficiaries /
                      entrepreneurs in their Bank accounts. The Implementing Agencies,
                      namely KVIC, KVIBs and DICs will associate reputed Non Government
                      Organization (NGOs) / reputed autonomous institutions / Self Help
                      Groups (SHGs) / National Small Industries Corporation (NSIC) / Udyami
                      Mitras empanelled under Rajiv Gandhi Udyami Mitra Yojana (RGUMY),
                      Panchayati Raj institutions and other relevant bodies in the
                      implementation of the Scheme, especially in the area of identification of
                      beneficiaries, of area specific viable projects, and providing training in
                      entrepreneurship development
                      Objectives
                          1. To generate employment opportunities in rural as well as urban
                              areas of the country through setting up of new self-employment
                              ventures / projects / micro enterprises.
                          2. To bring together widely dispersed traditional artisans / rural and
                              urban unemployed youth and give them self-employment
                              opportunities to the extent possible, at their place.
 2
                          3. To provide continuous and sustainable employment to a large
                              segment of traditional and prospective artisans and rural and
                              urban unemployed youth in the country, so as to help arrest
                              migration of rural youth to urban areas.
                          4. To increase the wage earning capacity of artisans and contribute
                              to increase in the growth rate of rural and urban employment.




                                           1
         DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.1       PAGE    02
SIB                                                                                September 11
                         Government Sponsored Loans - PMEGP
No.   SS CLK AM MGR                                 PROCEDURE NARRATIVE
        Quantum and Nature of Financial Assistance:

       Levels of funding under PMEGP
3
             Categories of        Beneficiary's
          beneficiaries under    contribution (of           Rate of Subsidy (of project cost)
                PMEGP              project cost)
        Area (location of project
                                                           Urban                 Rural
        / unit)
        General Category                  10%               15%                   25%
        Special (including SC /           05%               25%                   35%
        ST / OBC / Minorities /
        Women, Ex-servicemen,
        Physically handicapped,
        NER, Hill and Border
        areas etc.
        Note :
        (1) The maximum cost of the project / unit admissible under manufacturing sector is
            Rs. 25 lakh.
        (2) The maximum cost of the project / unit admissible under business / service sector is
            Rs.10 lakh.
        (3) The balance amount of the total project cost will be provided by Banks as term loan
                      Eligibility Conditions of Beneficiaries
                          1. Any individual, above 18 years of age
                          2. There will be no income ceiling for assistance for setting up
                               projects under PMEGP.
                          3. For setting up of project costing above Rs.10 lakh in the
                               manufacturing sector and above Rs.5 lakh in the business / service
                               sector, the beneficiaries should possess at least VIII standard pass
                               educational qualification.
                          4. Assistance under the Scheme is available only for new projects
                               sanctioned specifically under the PMEGP.
4
                          5. Self Help Groups (including those belonging to BPL provided that
                               they have not availed benefits under any other Scheme) are also
                               eligible for assistance under PMEGP.
                          6. Institutions registered under Societies Registration Act,1860;
                          7. Production Co-operative Societies,
                          8. Charitable Trusts.
                      Existing Units (under PMRY, REGP or any other scheme of Government
                      of India or State Government) and the units that have already availed
                      Government Subsidy under any other scheme of Government of India or
                      State Government are not eligible.




                                              2
            DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1      PAGE     03
    SIB                                                                             September 11
                          Government Sponsored Loans - PMEGP
    No.   SS CLK AM MGR                          PROCEDURE NARRATIVE
                          Other eligibility conditions

                              1. Crtified copy of the caste / community certificate or relevant
                                 document issued by the competent authority in the case of other
                                 special categories, is required to be produced by the beneficiary
                                 to the concerned branch of the Banks along with the Margin
                                 Money (subsidy) Claim.
                              2. A certified copy of the bye-laws of the institutions is required to
                                 be appended to the Margin Money (subsidy) Claim, wherever
                                 necessary.
                              3. Project cost will include Capital Expenditure and one cycle of
                                 Working Capital. Projects without Capital Expenditure are not
                                 eligible for financing under the Scheme. Projects costing more
                                 than Rs.5lakh, which do not require working capital, need
                                 clearance from the Regional Office or Controller of the Bank's
                                 Branch and the claims are required to be submitted with such
                                 certified copy of approval from Regional Office or Controller, as
                                 the case may be.
                              4. Cost of the land should not be included in the Project cost. Cost
                                 of the ready built as well as long lease or rental Workshed /
                                 Workshop can be included in the project cost subject to
5                                restricting such cost of ready built as well as long lease or rental
                                 workshed / workshop to be included in the project cost
                                 calculated for a maximum period of 3 years only.
                              5. PMEGP is applicable to all new viable micro enterprises,
                                 including Village Industries projects except activities indicated
                                 in the negative list of Village Industries. Existing / old units are
                                 not eligible.

                          Note

                              1. The Institutions / Production Co-operative Societies / Trusts
                                 specifically registered as such and SC / ST / OBC / Women /
                                 Physically Handicapped / Ex-Servicemen and Minority
                                 Institutions with necessary provisions in the bye-laws to that
                                 effect are eligible for Margin Money (subsidy) for the special
                                 categories. However, for Institutions / Production Cooperative
                                 Societies / Trusts not registered as belonging to special
                                 categories, will be eligible for Margin Money (Subsidy) for
                                 general category.
                              2. Only one person from one family is eligible for obtaining
                                 financial assistance for setting up of projects under PMEGP. The
                                 'family' includes self and spouse.




                                             3
            DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1     PAGE     04
    SIB                                                                            September 11
                          Government Sponsored Loans - PMEGP
    No.   SS CLK AM MGR                          PROCEDURE NARRATIVE
                          Implementing Agencies:

                          The Scheme will be implemented by Khadi and Village Industries
                          Commission (KVIC), Mumbai, a statutory body created by the Khadi
                          and Village Industries Commission Act, 1956, which will be the single
                          nodal agency at the national level. At the State level, the scheme will be
                          implemented through State Directorates of KVIC, State Khadi and
6                         Village Industries Boards (KVIBs) and District Industries Centres in
                          rural areas. In urban areas, the Scheme will be implemented by the State
                          District Industries Centres (DICs) only. KVIC will coordinate with State
                          KVIBs / State DICs and monitor performance in rural and urban areas.
                          KVIC and DICs will also involve NSIC, Udyami Mitras empanelled
                          under Rajiv Gandhi Udyami Mitra Yojana (RGUMY), Panchayati Raj
                          Institutions and other NGOs of repute in identification of beneficiaries
                          under PMEGP.




                                             4
    Other Agencies
    The details of other agencies to be associated by nodal agencies in the
    implementation of PMEGP are as under :
            Field Offices of KVIC and its State offices
            State KVI Boards
            District Industries Centre (DIC) of all State Governments /
            Union Territories Administrations reporting to respective
            Commissioners / Secretaries (Industries).
            Banks / Financial Institutions.
            KVI Federation
            Department of Women and Child Development (DWCD), Nehru
            Yuva Kendra Sangathan (NYKS), The Army Wives Welfare
            Association of India (AWWA) and Panchayati Raj Institutions
            NGOs having at least five years experience and expertise in
            Project Consultancy in Small Agro & Rural Industrial
            Promotion and Technical Consultancy Services, Rural
            Development, Social Welfare having requisite infrastructure and
            manpower and capable of reaching Village and Taluk level in
            the State or Districts. NGOs should have been funded by State
            or National Level Government Agency for any of its
            programmes in the preceding 3 years period.
            Professional Institutions / Technical Colleges recognized by
            Government / University and University Grants Commission
            (UGC) / All India Council for Technical Education (AICTE)
            having department for vocational guidance or technical courses
            providing skill based training like ITI, Rural Polytechnic, Food
            Processing Training Institute, etc.
            Certified KVI institutions aided by KVIC / KVIB provided these
            are in category A+, A or B and are having required
            infrastructure, manpower and expertise for the role.
            Departmental and Non-Departmental Training Centres of KVIC
            / KVIBs
            Micro, Small and Medium Enterprises Development Institutes
            (MSME-DIs), MSME Tool Rooms and Technical Development
            Centres, under the administrative control of Office of
            Development Commissioner, MSME.
            National Small Industries Corporation's (NSIC) offices,
            Technical Centres, Training Centres, Incubators and Training
            cum Incubation Centres (TICs) set up in PPP Mode.
            National level Entrepreneurship Development Institutes like
            National Institute for Entrepreneurship and Small Business
            Development (NIESBUD), National Institute for Micro, Small
            and Medium Enterprises (NIMSME) and Indian Institute of
            Entrepreneurship (IIE), Guwahati under the administrative
            control of Ministry of MSME, their branches and the
7           Entrepreneurship Development Centres (EDCs) set up by their
            Partner Institutions (PIs).
            Udyami Mitras empanelled under Rajiv Gandhi Udhyami Mitra
            Yojana of Ministry of MSME
            PMEGP Federation, whenever formed.

                      5
        DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1     PAGE    05
SIB                   Government Sponsored Loans - PMEGP                       September 11
No.   SS CLK AM MGR                          PROCEDURE NARRATIVE
                      Bank Finance
                      The Bank will sanction 90% of the project cost in case of General
8.a                   Category of beneficiary / institution and 95% in case of special category
                      of the beneficiary / institution, and disburse full amount suitably for
                      setting up of the project.
                      Bank will finance Capital Expenditure in the form of Term Loan and
                      Working Capital in the form of cash credit. Project can also be financed
                      by the Bank in the form of Composite Loan consisting of Capital
                      Expenditure and Working Capital. The amount of Bank Credit will be
8.b
                      ranging between 60-75% of the total project cost after deducting 15-35%
                      of margin money (subsidy) and owner's contribution of 10% from
                      beneficiaries belonging to general category and 5% from beneficiaries
                      belonging to special categories.
                      Though Banks will claim Margin Money (subsidy) on the basis of
                      projections of Capital Expenditure in the project report and sanction
                      thereof, Margin Money (subsidy) on the actual availment of Capital
8.c
                      Expenditure only will be retained and excess, if any, will be refunded to
                      KVIC, immediately after the project is ready for commencement of
                      production.
                      Working Capital component should be utilized in such a way that at one
                      point of stage it touches 100% limit of Cash Credit within three years of
                      lock in period of Margin Money and not less than 75% utilization of the
                      sanctioned limit. If it does not touch aforesaid limit, proportionate
8.d
                      amount of the Margin Money (subsidy) is to be recovered by the Bank /
                      Financial Institution and refunded to the KVIC at the end of the third
                      year.

                      Rate of Interest and Repayment:
                      Normal rate of interest may be charged. Repayment schedule may range
9
                      between 3 to 7 years after an initial moratorium as may be prescribed by
                      the concerned bank / financial institution.

                      Village Industry:
                      Any Village Industry including Coir based projects (except those
                      mentioned in the negative list) located in the rural area which produces
                      any goods or renders any service with or without the use of power and in
10
                      which the fixed capital investment per head of a full time artisan or
                      worker i.e. Capital Expenditure on workshop / workshed, machinery and
                      furniture divided by full time employment created by the project does
                      not exceed Rs. 1 lakh in plain areas and Rs.1.50 lakh in hilly areas.
                      Rural Area:
                         1. Any area classified as Village as per the revenue record of the
11                           State / Union Territory, irrespective of population.
                         2. It will also include any area even if classified as town, provided
                             its population does not exceed 20,000 persons.

                                         6
         DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1        PAGE     06
SIB                                                                                September 11
                       Government Sponsored Loans - PMEGP
No.    SS CLK AM MGR                           PROCEDURE NARRATIVE
                       Modalities:
                       Project proposals will be invited from potential beneficiaries at district
                       level through press, advertisement, radio and other multi-media by
12.a                   KVIC,KVIBs and DICs at periodical intervals depending on the target
                       allotted to that particular district. The scheme will also be advertised /
                       publicized through the Panchayati Raj Institutions which will also assist
                       in identification of beneficiaries.
                       Sponsoring of project by any agency is not mandatory. The beneficiary
                       can directly approach Bank / Financial Institution along with his / her
12.b                   project proposal or it can be sponsored by KVIC / KVIBs / DIC /
                       Panchayat Karyalayas etc. However, the applications received directly
                       by the Banks will be referred to the Task Force for its consideration.
                       A Task Force, consisting of the following members, will be set up to
                       scrutinize the applications received by it.
                       Dist Magistrate / Deputy Commissioner / Collector Chairman
                       Lead Bank Manager                                         Member
                       Representative of KVIC / KVIB                             Member
                       Representative of NYKS / SC / ST Corporation             Special Invitee
                       Representative of MSME-DI, ITI / Polytechnic              Special Invitee
12.c
                       Representatives from Panchayats
                       (To be nominated by Chairman /
                         District Magistrate / Deputy
                        Commissioner / Collector by rotation)                   3 members
                       General Manager, DIC or State Director of KVIC           Member Convenor
                       Note :
                       Task Force may also co-opt representatives of other lending institutions
                       The Task Force will scrutinize the applications and based on the
                       experience, technical qualification, skill, viability of the project etc., the
                       task force will shortlist the applications and call for an interview of the
                       applicants separately for rural and urban areas to assess their knowledge
                       about the proposed project, aptitude, interest, skill and entrepreneurship
12.d
                       abilities, market available, sincerity to repay and make the proposed
                       project success. The selected candidates will be provided project
                       formulation guidance and orientation by KVIC, KVIBs and DICs who
                       will also assist and guide them in project formulation and submission to
                       the concerned Bank in the area.
                       KVIC will identify the Nodal Banks at State level in consultation with
12.e                   State Governments and will forward the list to all the implementing
                       agencies.




                                           7
         DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1     PAGE     07
SIB                                                                             September 11
                       Government Sponsored Loans - PMEGP
No.    SS CLK AM MGR                          PROCEDURE NARRATIVE
                       The release of funds to the implementing agencies:
                       Government will provide funds under PMEGP to the nodal
                       implementing agency, i.e. KVIC which will in turn, (within a period of
                       15 days of receipt of the money from the Government), place the margin
                       money (subsidy)funds with the implementing Banks at the State level in
                       their respective accounts in accordance with the targets allocated to each
                       implementing agency. CEO, KVIC will convey the margin money
                       (subsidy) targets allotted to each State to the Principal Secretaries /
13.a
                       Secretaries (Industries) / Commissioners (Industries) simultaneously.
                       The target among the Districts in the State will be assigned by the State
                       Level Bankers Coordination Committee. SLBCC will ensure that targets
                       are evenly distributed within each district. The State-wise targets in
                       respect of KVIC / KVIBs will be made available by KVIC to SLBCC
                       where overall allocation of district-wise targets will be decided. Any
                       modification of the targets for which KVIC is directly responsible will
                       be permitted only with the concurrence of the Ministry.
                       KVIC will place the margin money (subsidy) amount with the Banks
                       involved in the implementation of the scheme in accordance with the
                       targets allocated to the implementing Banks in the State / District. DICs,
13.b
                       in close coordination with Banks, will ensure that at least 50 % of the
                       total margin money (subsidy) allocated to them will be utilized in setting
                       up of projects in rural areas.
                       KVIC being the single Nodal Agency at the National level, will
                       coordinate with the identified implementing agencies, i.e., KVIBs, DICs
                       and others. KVIC will carry out most of the important tasks envisaged in
                       the forward and backward linkages, including etracking, web
                       management, publicity, physical verification of units, organizing EDP
                       training programmes, awareness camps, workshops and exhibitions and
                       therefore will require to utilize major share of the allocation under
                       forward and backward linkages. However, KVIC will ensure that it will
                       reserve and allocate at least 25 % of the total allocation under Forward
13.c                   and Backward linkages, under the Scheme to DICs of different
                       participating States appropriately taking into account the demand and
                       extent of implementation. This money will be released to DICs, only
                       after obtaining an undertaking from the State Government that the funds
                       already provided under the erstwhile PMRY Scheme's Training and Pre
                       motivational campaigns have been fully utilized by the DICs. Any
                       unspent balance available under the training and contingencies of
                       erstwhile PMRY Scheme will be utilized for training and relevant
                       expenditure under PMEGP. DICs will submit monthly utilization report
                       to KVIC in this regard.




                                          8
         DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1        PAGE     08
SIB                                                                                September 11
                       Government Sponsored Loans - PMEGP
No.    SS CLK AM MGR                           PROCEDURE NARRATIVE
                       The Task Force, under the chairmanship of District Magistrate / Deputy
                       Commissioner / Collector will hold quarterly meeting with the Banks at
                       district level to review the status of the project proposals. Wherever the
                       projects are rejected, shortcomings / reasons will be furnished by the
                       concerned Banks to the implementing agencies concerned and the
                       applicants concerned will be requested by KVIC / KVIBs / DICs to
                       provide additional information / documents if required and concerned
13.d
                       representatives of KVIC, KVIBs and DICs, will provide assistance to the
                       applicants in this process. Since the Bank's representative will also be a
                       member of the Task Force, it needs to be ensured that maximum number
                       of projects, cleared by the Task Force, is sanctioned by the Banks.
                       Chairman of the District Task Force will review the performance of
                       Banks and the loan repayment / recovery status in the quarterly review
                       meetings.
                       Banks will take their own credit decision on the basis of viability of each
                       project. No collateral security will be insisted upon by Banks in line with
                       the guidelines of RBI for projects involving loan up to Rs.5 lakh in
                       respect of the projects cleared by the Task Force. However, they will
                       appraise projects both technically and economically after ensuring that
                       each project fulfills inter alia the criteria of::

                            1. Industry
13.e
                            2. Per Capita Investment
                            3. Own Contribution
                            4. Rural Areas (projects sponsored by KVIC / KVIBs / DICs) and
                            5. Negative List
                       It is essential that the applications cleared by the District Task Force also
                       fulfill these requirements at that stage itself so as to avoid delays in
                       approval of loans in Banks.




                                           9
         DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1       PAGE     09
SIB                                                                               September 11
                       Government Sponsored Loans - PMEGP
No.    SS CLK AM MGR                           PROCEDURE NARRATIVE
                       Once the project proposals are received by KVIC, KVIBs, DICs or
                       Banks, the details of such proposals are to be fed in the web based
                       application tracking system with a unique registration number for each
                       beneficiary at the District level by the State Offices of KVIC / State
                       KVIBs / State DICs to enable the entrepreneurs to track their application
                       status at any point of time. Till such time the e-tracking system becomes
                       fully operational (for which detailed guidelines will be issued by KVIC
                       separately to all concerned) disaggregated data in respect of progress of
                       each application, assistance availed by beneficiaries belonging to special
13.f                   categories (category wise), employment details, etc., will be maintained
                       by KVIC / KVIBs / DICs and the data will be reconciled every month
                       with Director (PMEGP) in KVIC. The status of such reconciliation will
                       be reviewed by the District Magistrate / Deputy Commissioner /
                       Collector, in the Task Force meetings and by CEO, KVIC in the review
                       meetings at KVIC. Separate colour code will be given to application
                       form as well as applications / claim forms of Margin Money (subsidy)
                       through KVIC / KVIBs / DICs, so as to help the beneficiaries and the
                       processing / sanctioning functionaries to identify and monitor the
                       progress of implementation.
                       Once the project is sanctioned and before the first installment of the
                       Bank Finance is released to the beneficiary, Bank will inform the State /
                       Regional Office of the KVIC / KVIBs / State DICs, as the case may be,
                       for arranging EDP training to the beneficiary, if he / she has not already
13.g                   undergone such training. If he / she has already undergone such training
                       of at least 2 weeks duration, either with the training centre of KVIC /
                       KVIB / State DICs or the institutions recognized by or under the
                       administrative control of Ministry of MSME or at any other training
                       centre of repute, such beneficiary need not undergo further EDP training.
                       After the successful completion of EDP training arranged by the KVIC /
                       KVIBs / State DICs, the beneficiary will deposit with the bank, the
13.h
                       owner's contribution. Thereafter, the bank will release first installment of
                       the Bank Finance to the beneficiary.

                       Projects sanctioned will be declared ineligible for Margin Money
13.i
                       (subsidy) assistance if the EDP training is not completed.




                                          10
         DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1     PAGE     10
SIB                                                                             September 11
                       Government Sponsored Loans - PMEGP
No.    SS CLK AM MGR                          PROCEDURE NARRATIVE
                       After the release of Bank finance either partly or fully, Bank will submit
                       Margin Money (subsidy) claim in the prescribed format to the
                       designated Nodal Branch of the State / Region where KVIC has placed
                       lump sum deposit of Margin Money (subsidy) in advance in the Savings
                       Bank Account in the name of KVIC, for release of Margin Money
                       (subsidy). In the case of projects financed by the branches of the
                       Regional Rural Banks, the financing branches of the RRBs will have to
                       submit the Margin Money (subsidy) Claim to their Head Office, which,
                       in turn, will submit the consolidated claims to the designated Nodal
                       Branch of their sponsoring Bank. In the case of projects financed by
                       SIDBI, the guidelines issued by SIDBI for release of loan / margin
13.j
                       money (subsidy) will be followed. Though the margin money (subsidy)
                       will be released by the designated Nodal Branch of the Bank, KVIC /
                       State DIC is the final authority to either accept the project / claim or
                       reject, based on the parameters of the Scheme. Detailed grounds for
                       rejections shall be maintained by KVIC / KVIBs / DICs. A separate
                       system of acknowledging grievances or complaints will be instituted by
                       KVIC / KVIBs and DICs and a monthly report with the details of
                       grievances / complaints received and the status / action taken for their
                       redressal shall be furnished to CEO, KVIC by KVIBs and DICs. A
                       consolidated report will be forwarded to the Ministry of MSME every
                       quarter by CEO, KVIC.
                       Once the Margin Money (subsidy) is released in favour of the loanee, it
                       should be kept in the Term Deposit Receipt of three years at branch level
13.k                   in the name of the beneficiary / Institution. No interest will be paid on
                       the TDR and no interest will be charged on loan to the corresponding
                       amount of TDR.




                                         11
         DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1       PAGE    11
SIB                                                                               September 11
                       Government Sponsored Loans - PMEGP
No.    SS CLK AM MGR                          PROCEDURE NARRATIVE
                       Since "Margin Money" (subsidy) is to be provided in the form of
                       subsidy (Grant), it will be credited to the Borrowers loan account after
13.l
                       three years from the date of first disbursement to the borrower /
                       institution, by the Bank.
                       In case the Bank's advance goes "bad" before the three year period, due
                       to reasons, beyond the control of the beneficiary, the Margin Money
13.m
                       (subsidy) will be adjusted by the Bank to liquidate the loan liability of
                       the borrower either in part or full.
                       In case any recovery is effected subsequently by the Bank from any
                       source whatsoever, such recovery will be utilized by the Bank for
13.n
                       liquidating their outstanding dues first. Any surplus will be remitted to
                       KVIC.
                       Margin Money (subsidy) will be 'one time assistance', from Government.
13.o                   For any enhancement of credit limit or for expansion / modernization of
                       the project, margin money (subsidy) assistance is not available.
                       Margin Money (subsidy) assistance is available only for new projects
13.p                   sanctioned specifically under the PMEGP. Existing units are not eligible
                       under the Scheme.
                       Projects financed jointly i.e. financed from two different sources (Banks
13.q                   / Financial institutions), are not eligible for Margin Money (subsidy)
                       assistance.
                       Bank has to obtain an undertaking from the beneficiary before the
                       release of Bank Finance that, in the event of objection (recorded and
13.r                   communicated in writing) by KVIC / KVIB / State DIC, the beneficiary
                       will refund the Margin Money (subsidy) kept in the TDR or released to
                       him after three years period.
                       Banks / KVIC / KVIBs / DICs have to ensure that each beneficiary
                       prominently displays the following sign-board at the main entrance of
                       his project site :

                                         ………………………………..(Unit Name)
13.s                                 Financed By ……………… (Bank), District Name
                                                        Under
                                        Prime Minister's Employment Generation
                                                 Programme (PMEGP)
                                        Khadi and Village Industries Commission
                                           (Ministry of MSME, Govt. of India)

                       Margin Money (subsidy) Claim will be submitted by the Financing
13.t                   Branch of the Bank to the designated Nodal Branch at the earliest
                       possible time.




                                         12
         DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1      PAGE     12
SIB                                                                              September 11
                       Government Sponsored Loans - PMEGP
No.    SS CLK AM MGR                           PROCEDURE NARRATIVE
                       Entrepreneurship Development Programme (EDP)

                       The objective of EDP is to provide orientation and awareness pertaining
                       to various managerial and operational functions like finance, production,
                       marketing, enterprise management, banking formalities, bookkeeping,
                       etc. The duration for EDP under REGP was only 3 days, whereas, under
                       PMRY it was 10 days. During various meetings, discussions and
                       recommendations of Department Related Parliamentary Standing
                       Committee for Industry (DRPSCI) it was felt that 3 days were not
                       adequate for providing this inputs effectively and, hence two to three
                       weeks period has been provided under PMEGP which will include
                       interaction with successful rural entrepreneur, banks as well as
                       orientation through field visits. The EDP will be conducted through
                       KVIC, KVIB Training Centers as well as Accredited Training Centers
14.a
                       run by Central Government, NSIC, the three national level
                       Entrepreneurship Development Institutes (EDIs), i.e., NIESBUD,
                       NIMSME and IIE, and their partner institutions under the administrative
                       control of Ministry of MSME, State Governments, Banks, Rural
                       Development and Self Employment Training Institutes (RUDSETI)
                       reputed NGOs, and other organizations / institutions, identified by the
                       Government from time to time. EDP will be mandatory for all the
                       PMEGP beneficiaries. However, the beneficiaries who have undergone
                       EDP earlier of duration not less than two weeks through KVIC / KVIB
                       or reputed training centers will be exempted from undergoing fresh
                       EDP. The training centres / institutes will be identified by KVIC and
                       extensive publicity will be provided about the training centres /
                       institutes, content of courses available, duration, etc. by circulating the
                       same to all the Implementing Agencies.
                       An amount of Rs. 2500/- to Rs.4000/- per trainee for a period of two to
                       three weeks towards course material, honorarium to guest speakers,
                       lodging, boarding expenses, etc. is admissible under the Scheme. KVIC
14.b
                       will reimburse the expenditure to the training centres / institutes chosen
                       for the purpose, in accordance with the procedures to be separately
                       devised by it and circulated to KVIBs and DICs.
                       Physical verification of PMEGP Units
                       100% physical verification of the actual establishment and working
                       status of each of the units, set up under PMEGP, including those set up
                       through KVIBs and DICs, will be done by KVIC, through the agencies
                       of State Government and / or, if necessary by outsourcing the work to
                       professional institutes having expertise in this area, following the
15.a
                       prescribed procedures as per General Financial Rules (GFR) of
                       Government of India. Banks, DICs and KVIBs will coordinate and assist
                       KVIC in ensuring 100 % physical verification. A suitable proforma will
                       be designed by KVIC for such physical verification of units. Quarterly
                       reports, in the prescribed format will be submitted by KVIC to the
                       Ministry of MSME.

                                          13
          DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1    PAGE    13
 SIB                                                                            September 11
                        Government Sponsored Loans - PMEGP
 No.    SS CLK AM MGR                          PROCEDURE NARRATIVE
                        Awareness Camps:
                        KVIC and State DICs will organize awareness camps, in close
                        coordination with each other and KVIBs, throughout the country to
                        popularize PMEGP and to educate potential beneficiaries in rural, semi
                        rural and urban areas about the Scheme. The awareness camps will
                        involve participation from the unemployed men and women with special
                        focus on special category, i.e., SC, ST, OBC, Physically challenged, Ex-
                        servicemen, Minorities, Women, etc. The requisite information / details
                        in this regard will be obtained by KVIC / KVIBs / DICs from State level
                        organizations like SC / ST Corporations, AWWA, NYKS, reputed
                        NGOs and Employment exchanges. There will be two camps
 16.a
                        permissible for a district, one by KVIC in coordination with concerned
                        KVIB and another by DIC. KVIC and DIC should preferably consider
                        organizing these camps jointly for a specific district. A Committee
                        consisting of Lead Bank, KVIC / KVIB / DIC and Principal, Multi
                        Disciplinary Training Centres (MDTC) of KVIC will shortlist the
                        beneficiaries and send them for training as well as RICS for project
                        formulation and to Bank for project sanction. The amount specified can
                        be spent on publicity, arrangement and other necessary expenses for
                        organizing such camps, which will be communicated by KVIC in their
                        guidelines separately.

                        Mandatory activities to be undertaken in the awareness camps


                                Publicity through banners, posters, hoardings and press
                                advertisements in local newspapers.
                                Presentation on the scheme by KVIC / KVIB / DIC officials.
16.b                            Presentation by Lead Bank of the area.
                                Presentation by successful PMEGP / REGP Entrepreneurs.
                                Distribution of sanction letters to PMEGP entrepreneurs who
                                have been sanctioned the project by Bank.
                                Press conference

                        Collection of data (in the prescribed format) from the potential
                        beneficiaries, which will include information like profile of
                        beneficiaries, skills possessed, background and qualifications,
                        experience, project interested in, etc. For ascertaining the training a
16.c
                        committee consisting of representatives of Lead Bank, KVIC, KVIB,
                        DIC and Principal, MDTC will shortlist the beneficiaries and send them
                        for orientation and training. They will also be sent to RICS and Banks
                        for project formulation and project sanction, respectively.




                                          14
         DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1     PAGE     14
 SIB                                                                            September 11
                       Government Sponsored Loans - PMEGP
 No.   SS CLK AM MGR                          PROCEDURE NARRATIVE
                       A Shelf of Projects for consideration under PMEGP, prepared by KVIC
                       has already been circulated by KVIC / Ministry to some of the
                       prominent State Industries Secretaries and Banks including State Bank
                       of India, Central Bank of India, Canara Bank, Allahabad Bank and
                       Union Bank of India. For any further inclusion of projects in the shelf
16.d
                       already prepared, KVIBs and DICs shall forward the details of such
                       projects to KVIC. KVIC will in turn, expand the Shelf of Projects, in due
                       course, in consultation with Banks, KVIBs and DICs, by utilizing the
                       provisions in 'Training and Orientation' under forward and backward
                       linkages.
                       Marketing Support:
                       Marketing support for the products, produced by the units under PMEGP
                       may be provided through KVIC's Marketing Sales outlets, as far as
17.a                   possible. KVIC will reserve the right to provide such a support based on
                       quality, pricing and other parameters to be separately circulated by
                       KVIC to KVIBs / DICs.
                       Besides the above, Exhibitions, Workshops at District / State Zonal
17.b                   / National and International levels, Buyer-Seller Meets, etc., will be
                       arranged for the benefit of PMEGP beneficiaries by KVIC.
                       Bankers Review Meetings
                       PMEGP is a bank driven scheme and the final sanction of project and
                       release of loan is done at the level of concerned Bank. It is therefore
                       imperative that KVIC, KVIBs and DICs interact regularly with the
18.a
                       higher officials of Bankers at District / State / National level to ensure
                       that the bottle necks, if any, in implementation, are resolved, outcomes
                       are effectively achieved and targets are met. Bankers Review Meeting at
                       following levels shall be organized as below :
                       Lead District Managers Meet (LDM)
                       This will be organized by State Office and Divisional Office of KVIC
                       jointly with KVIB and DIC. The focus of the meeting will be to inform
18.b                   and educate the bank officials at LDM level about PMEGP and regularly
                       monitor and review the implementation of the scheme. The meeting will
                       be held on quarterly basis.

                       Zonal review meeting
                       To review and monitor the PMEGP scheme, zonal review will be
18.c                   conducted quarterly by KVIC in 6 zones where representatives of KVIC,
                       KVIB and DIC will participate in the review. Concerned Bank officers
                       will also be invited.




                                         15
         DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1     PAGE    15
 SIB                                                                            September 11
                       Government Sponsored Loans - PMEGP
 No.   SS CLK AM MGR                          PROCEDURE NARRATIVE
                       Top level Bankers Meeting
                        KVIC will organize the Top Level Bankers meeting half yearly (in June
                       and December) so that proper monitoring can be done at the beginning
                       and towards the end of the financial year. CMDs / Senior Executives of
                       nationalized Banks, representatives from Ministry of MSME, State DICs
                       and KVIBs will participate in the National level Bankers meeting which
18.d
                       will be chaired by CEO, KVIC. All the States / UTs will be invited in
                       two groups and KVIC will ensure that around half of the States / UTs'
                       representatives (of KVIBs and DICs) participate in each of these half
                       yearly review meetings. The meeting will focus on reviewing the targets
                       and will examine the issues related to policy decisions relating to banks
                       for the implementation of PMEGP.
                       MIS Package, Application Tracking System, E-Portal and other supporting
                       packages
                       E-governance is a vital requirement for effective monitoring and
                       reviewing of the scheme. In addition, data base of existing REGP
                       beneficiaries as well as PMRY have also to be documented. A separate
                       PMEGP website will be constructed by KVIC, including all the relevant
                       linkages with Ministry of MSME, State KVIBs, DICs, NIC and Banks,
19                     providing all the necessary information. Application tracking system
                       will also be introduced by KVIC in coordination with KVIBs / DICs for
                       PMEGP beneficiaries. In addition Rural Industrial Consultancy Services
                       (RICS)'s software package for project preparation of KVIC will be
                       extended to all training centers in the country for assisting potential
                       beneficiaries to prepare project under PMEGP. A separate provision is
                       available under forward/backward linkages for the purposes for use by
                       KVIC.
                       Role of Private Sector (Scheduled, Commercial / Co-operative) Banks in
                       the implementation of PMEGP
                       The Scheme will also be implemented through the Private Sector
                       Scheduled Commercial Banks / Co-operative Banks on selective basis,
20                     after verification of intending Banks' last 3 years' Balance Sheet and
                       ascertaining quantum of lending portfolio. Margin Money (subsidy)
                       portion will be paid on actual reimbursement basis to the Banks by
                       KVIC.




                                         16
         DEPARTMENTAL PROCEDURES MANUAL                     SECTION:P.725.1      PAGE     16
 SIB                                                                             September 11
                       Government Sponsored Loans - PMEGP
 No.   SS CLK AM MGR                            PROCEDURE NARRATIVE
                       Negative List of Activities

                       The following list of activities will not be permitted under PMEGP for
                       setting up of micro enterprises / projects / units.
                            1. Any industry / business connected with Meat(slaughtered),i.e.
                                processing, canning and / or serving items made of it as food,
                                production / manufacturing or sale of intoxicant items like Beedi
                                / Pan / Cigar / Cigarette etc., any Hotel or Dhaba or sales outlet
                                serving liquor, preparation / producing tobacco as raw materials,
                                tapping of toddy for sale.
                            2. Any industry / business connected with cultivation of crops /
                                plantation like Tea, Coffee, Rubber etc. sericulture (Cocoon
                                rearing), Horticulture, Floriculture, Animal Husbandry like
21                              Pisciculture, Piggery, Poultry, Harvester machines etc.
                            3. Manufacturing of Polythene carry bags of less than 20 microns
                                thickness and manufacture of carry bags or containers made of
                                recycled plastic for storing, carrying, dispensing or packaging of
                                food stuff and any other item which causes environmental
                                problems.
                            4. Industries such as processing of Pashmina Wool and such other
                                products like hand spinning and hand weaving, taking advantage
                                of Khadi Programme under the purview of Certification Rules
                                and availing sales rebate.
                            5. Rural Transport (Except Auto Rickshaw in Andaman & Nicobar
                                Islands, House Boat, Shikara & Tourist Boats in J&K and Cycle
                                Rickshaw).




                                           17
          DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2      PAGE    01
SIB       Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY    September 11
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         The Ministry of Rural Development, Government of India have launched
                         the programme known as 'Swarnajayanti Gram Swarozgar Yojana'
                         (SGSY) by restructuring the following existing schemes :
                              1. Integrated Rural Development Programme (IRDP)
                              2. Training of Rural Youth for Self Employment (TRYSEM)
01                            3. Development of Women and Children in Rural Areas
                                  (DWCRA)
                              4. Supply of Improved Toolkits to Rural Artisans (SITRA)
                              5. Ganga Kalyan Yojana (GKY)
                              6. Million Wells Scheme (MWS)

                         The Scheme

                         The SGSY Scheme is operative from 1st April, 1999 in rural areas of the
                         country. SGSY is a holistic Scheme covering all aspects of self
                         employment such as organisation of the poor into Self Help Groups,
                         training, credit, technology, infrastructure and marketing. The Scheme
                         will be funded by the Centre and the States in the ratio of 75:25 and will
                         be implemented by Commercial Banks, Regional Rural Banks and Co-
02.a                     operative Banks. Other financial institutions, Panchayat Raj Institutions,
                         District Rural Development Agencies (DRDAs), Non-Government
                         Organisations (NGOs), Technical Institutions in the district, will be
                         involved in the process of planning, implementation and monitoring of the
                         Scheme. NGO's help may be sought in the formation and nurturing of the
                         Self Help Groups (SHGs) as well as in the monitoring of the progress of
                         the Swarozgaris. Where feasible their services may be utilised in the
                         provision of technology support, quality control of the products and as
                         recovery monitors cum facilitators.
                         The Scheme aims at establishing a large number of micro enterprises in
                         the rural areas. The list of Below Poverty Line (BPL) households
                         identified through BPL census duly approved by Gram Sabha will form
                         the basis for identification of families for assistance under SGSY. The
                         objective of the programme is to bring the assisted poor families
                         (Swarozgaris) above the poverty line by ensuring appreciable sustained
02.b
                         income over period of time. This objective is to be achieved by inter alia
                         organising the rural poor into Self Help Groups (SHGs) through the
                         process of social mobilisation, their training and capacity building and
                         provision of income generating assets. The rural poor such as those with
                         land, landless labour, educated unemployed, rural artisans and disabled
                         are covered under the Scheme.




                                               1
          DEPARTMENTAL PROCEDURES MANUAL                       SECTION:P.725.2        PAGE     02
SIB                                                                                   September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         The assisted poor families known as Swarozgaris can be either individuals
                         or groups and would be selected from BPL families by a three member
02.c
                         team consisting of Block Development Officer (BDO), Banker and
                         Sarpanch.
                         SGSY will focus on vulnerable sections of the rural poor. Accordingly,
02.d                     the SC / ST will account for at least 50 percent, women 40 percent and the
                         disabled 3 percent of those assisted.
                         Skill Up gradation / Training
                         Once the person or group of persons has been identified for assistance,
                         their training need also is to be ascertained with reference to Minimum
                         Skill Requirement (MSR). The assessment regarding technical skills
                         would be made by line departments and that of managerial skills by the
                         banker, while scrutinising the loan applications. Swarozgaris possessing
                         skills will be put through basic orientation programme which is
                         mandatory. This programme includes elements of book-keeping,
03.a
                         knowledge of market, identification and appraisal, acquaintance with
                         product costing, product pricing, familiarisation with project financing by
                         banks as well as basic skills in the key activity identified. It will be for a
                         short duration of not more than 2 days. BDOs, Bankers and line
                         departments will act as resource persons for imparting the training. The
                         training expenditure incurred by the training institutions for both Basic
                         Orientation and Skill Development Training will be met by DRDAs from
                         out of the SGSY Fund.
                         For those beneficiaries who need additional skill development /
                         upgradation of skills, appropriate training would be organized through
                         Government institutions, ITIs, Polytechnics, Universities, NGOs, etc.
03.b
                         Swarozgaris will be eligible for loans under SGSY when they possess
                         Minimum Skill Requirement and it will be disbursed only when they have
                         satisfactorily completed the skill training.
                         Activity Clusters, Key Activities
                         The focus under the Scheme should be on development of activity clusters
                         with emphasis on key activities identified in the block, both for group as
                         well as individual assistance. The activity clusters would be in geographic
04.a
                         clusters of neighbouring villages within reasonable radius. However,
                         assistance is not prohibited for other activities. This is only an enabling
                         provision for exceptional cases and it is expected that the funding of key
                         activities will be the norm.




                                                2
          DEPARTMENTAL PROCEDURES MANUAL                       SECTION:P.725.2       PAGE     03
SIB                                                                                  September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         The SGSY Committee will select about 10 activities per block. However,
                         focus should be on 4-5 key activities, which are identified for training and
                         micro enterprise development in a cluster approach for larger number of
                         groups. Care should, however, be taken that the market is either readily
                         available or there is a potential for market creation for the products. The
04.b
                         District SGSY Committee is empowered to add or delete any activity in
                         the list of selected key activities with due justification. The DRDAs shall
                         prepare directory of the selected key activities in the District (shelf of
                         projects), which will be consolidated at the State level for preparation of
                         directory of selected key activities.
                         On farm activities to be assisted would include minor irrigation such as
                         open dug well / bore / tube well / lift irrigation / check dam, etc. Non-farm
                         activities will include those activities that result in the production of
                         goods / services that have ready market. The unit cost as fixed by the
04.c                     Regional Committees of NABARD should be taken into consideration as
                         indicative cost while fixing the unit cost for the farm sector. In regard to
                         loans falling under Industry, Service and Business (ISB) Sector, the
                         responsibility of fixing the unit cost and other techno-economic
                         parameters is of the District SGSY Committee.
                         Self-Help Groups (SHGs)
                         The Self Help Groups (SHGs) shall be organised by Swarozgaris drawn
                         from the BPL list approved by Gram Sabha. The Scheme provides for
                         formation of Self Help Groups (SHGs), nurturing and their linkages with
05.a
                         banks. SHGs may be an informal group or registered under Societies Act,
                         State Co-operative Act or as a partnership firm. The assistance (loan cum
                         subsidy) may be extended to individuals in a group or to all members in
                         the group for taking up income generation activities.

                         Group activities will be given preference and progressively majority of
05.b                     the funding will be for Self Help Groups. Half the groups formed at block
                         level should be exclusively women groups.
                         Self Help Groups go through various stages of evolution viz. Group
                         formation, Group Stabilization, Micro Credit stage and Micro Enterprise
05.c
                         Development stage. Under the Scheme, generally a Self Help Group may
                         consist of 10-20 persons.




                                               3
          DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2       PAGE     04
SIB                                                                                 September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         However, in difficult areas like deserts, hills and areas with scattered and
                         sparse population and in case of minor irrigation and disabled persons,
05.d                     this number may vary from 5-20. The difficult areas have to be identified
                         by the State Level SGSY Committee and the above relaxation in
                         membership will be permitted only in such areas.
                         Generally all members of the group should belong to families below the
                         poverty line (BPL). However, if necessary, a maximum of 20% and in
                         exceptional cases, where essentially required, up to a maximum of 30% of
05.e
                         the members in a group may be taken from families marginally above the
                         poverty line living contiguously with BPL families and if they are
                         acceptable to the BPL members of the group.

                         The Above Poverty Line (APL) members will not be eligible for the
                         subsidy under the Scheme. The group shall not consist of more than one
                         member from the same family. A person should not be a member of more
                         than one group. The BPL families must actively participate in the
05.f
                         management and decision making, which should not ordinarily be entirely
                         in the hands of the APL families. Further, APL members of the SHG shall
                         not become office bearers (Group leader, Assistant Group leader or
                         Treasurer) of the group.

                         The group should operate a group account preferably in their service area
05.g                     bank branch, so as to deposit the balance amounts left with the groups
                         after disbursing loans to its members.
                         The group should maintain simple basic records such as minutes book,
05.h                     attendance register, loan ledger, general ledger, cash book, bank pass
                         book and individual pass books.
                         In case of disabled persons, the groups formed should ideally be disability
                         specific, wherever possible; however, in case sufficient number of people
05.i                     for formation of disability specific groups are not available, a group may
                         comprise of persons with diverse disabilities or a group may comprise of
                         both disabled and non disabled persons below the poverty line.




                                               4
          DEPARTMENTAL PROCEDURES MANUAL                       SECTION:P.725.2        PAGE     05
SIB                                                                                   September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         In cases where the size of the SHG is large {as in the case of
                         Neighbourhood Groups (NHGs) under the Kudumbashree Programme of
                         Government of Kerala where a neighbourhood group can comprise up to
                         40 members}, banks have been expressing difficulty in extending finance
05.j                     to such large groups. Hence, sub groups within the large group may be
                         considered for financing by the banks under the SGSY provided they (or
                         the large group) have satisfied the required grading criteria, possess all the
                         characteristics of a viable and sustainable group and are found credit-
                         worthy by the banks.
                         Definition of Family and Wilful Defaulter

                         The terms 'Family' and 'Defaulter' for the purpose of SGSY guidelines
                         have been defined by the Government of India as under :

06.a                     'BPL Family' under the guidelines would be treated as a unit for the
                         purpose of giving income generating assets. The 'Family' would consist of
                         members of a household and united by ties of marriage, blood and
                         adoption. The family would consist of husband, wife, dependent parents /
                         sons / daughters / brothers and sisters. The moment a parent / son /
                         daughter / brother / sister is no longer dependent and has a separate
                         household, he will no longer be a member of the same BPL family.
                         A household having two kitchens and two ration cards should not be
                         treated as a family and the existence of two kitchens or two ration cards in
                         the same house is an indication of two families. Mere declaration by the
                         loan applicant that he has separated from the family may not be
                         considered as sufficient document for separate household. It needs to be
06.b
                         ensured that ration card may not be insisted upon while defining the
                         terms, due to various ground level difficulties faced in its procurement.
                         Banks may devise their own ways of verifying the facts while taking
                         decision on the same by inspecting / visiting the villages in case of
                         doubtful cases.

                         As far as the term 'Wilful defaulter' is concerned, it is defined as "one who
06.c                     is capable of repaying the loan, but has been defaulting intentionally and
                         not repaying the loan deliberately and wilfully".




                                                5
          DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2       PAGE     06
SIB                                                                                 September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         It is desirable that wilful defaulters should not be financed under SGSY.
                         In case wilful defaulters are members of a group, they might be allowed to
                         benefit from the thrift and credit activities of the group including the
                         corpus built up with the assistance of Revolving Fund. But at the stage of
                         assistance for economic activities, the wilful defaulters should not have
                         the benefit of further assistance until the outstanding loans are repaid.
06.d
                         Wilful defaulters of the group should not get benefits under the SGSY
                         Scheme and the group may be financed excluding such defaulters while
                         documenting the loan. Further, non-wilful defaulters should not be
                         debarred from receiving the loan. They may be certified by a team
                         comprising the BDO or his representative, bank manager and the
                         Sarpanch.

                         Revolving Fund
                         SHGs that are in existence for about six months and have demonstrated
                         the potential of a viable group enters the third stage, wherein it receives
                         the Revolving Fund from DRDA and banks as cash credit facility. The
                         DRDAs may release subsidy, which is equal to the group corpus with a
07.a
                         minimum of Rs.5000/- and a maximum of Rs.10000/- linked with bank
                         credit. The banks would sanction credit, which would be in multiples of
                         the group corpus and could go up to four times of the group corpus as
                         cash credit facility based on the absorption capacity and credit worthiness
                         of the group.

                         Subsequently, if it is found that the group has not been able to reach the
                         micro enterprise stage and requires further financial support to continue in
                         the micro finance stage for some more time, performance of such groups
                         may be got evaluated. In the evaluation if it is observed that the group has
07.b                     been successfully utilising the Revolving Fund, they could be considered
                         for sanction of further doses of subsidy fund up to a maximum of
                         Rs.20000/- inclusive of previous doses linked with bank credit. The
                         subsidy of Rs.20000/- released by DRDA will be adjusted against the loan
                         at the end of the cash credit period on the request of the group.
                         The group corpus would be defined as the total amount available with the
                         group inclusive of cash with the group, amount in Savings Bank account
07.c
                         of the group, loans outstanding against members of the group and interest
                         earned on the loans as well as deposits.




                                               6
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.2        PAGE     07
SIB                                                                                    September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         The Revolving Fund is provided to the groups to augment the group
                         corpus so as to enable larger number of members to avail loans and also to
                         facilitate increase in the per capita loan available to the members. The
07.d                     Revolving Fund imparts credit discipline and financial management skills
                         to the members so that they become credit worthy. SHGs that have
                         demonstrated their successful existence, will receive assistance for
                         economic activities under the Scheme.
                         Lending Norms

                         The size of loan under the Scheme would depend on the nature of project.
                         There is no investment ceiling other than the unit cost i.e. investment
                         requirement worked out for the project. The loans under the Scheme
                         would be composite loan comprising of Term Loan and working capital.
                         The loan component and the admissible subsidy together would be equal
08.a
                         to total project cost. Banks may follow model project report set out in key
                         activities of the districts for finalising the project cost of the Swarozgaris.
                         Under any circumstance under financing is to be avoided. Swarozgaris
                         will be given the full amount of loan and subsidy and they will have the
                         freedom to procure the assets themselves. Disbursements up to
                         Rs.10, 000/- under Industry, Service and Business (ISB) sector may be
                         made in cash where a number of items are to be bought.
                         Group loans
                         Ideally, under the group loaning, the group should take up single activity,
                         but if there is a necessity, the group could also take up multiple activities
                         under the group loaning. In either case, loan will be sanctioned in the
08.b
                         name of the group and the group stands as guarantee to the bank for
                         prompt repayment of loan. The group is entitled to subsidy of 50% of the
                         project cost subject to per capita subsidy of Rs.10000/- or Rs.1.25 lakhs,
                         whichever is less.

                         Multiple doses of credit
                         Emphasis is laid on multiple dose of assistance. This would mean
                         assisting a Swarozgari over a period of time with second and subsequent
                         dose(s) of credit enabling him / her to cross the poverty line as also access
08.c                     higher amounts of credit. Subsidy entitlement for all doses taken together
                         should not exceed the limit prescribed for that category. The second and
                         subsequent doses may be granted by the same bank or any other bank
                         during the currency of first / earlier loan provided the bank is satisfied
                         about the financial discipline of the first / earlier dose.




                                                7
          DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2       PAGE     08
SIB                                                                                 September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE

                         Generally, the people who are asset-less and skill-less are poorest of the
                         poor and get left out under the programme. Such category of people may
                         require small doses of multiple credit over a period of time coupled with
                         emphasis on awareness creation, training and capacity building. The
08.d                     activities which are easier to handle and product is easily marketable
                         could be identified for such category of people to ensure sustainable
                         income, so that, they do not fall into debt trap. DRDAs may ensure that
                         anticipated income as stipulated in the project is realized during the
                         project period in order to enable the Swarozgaris to cross the poverty line.

                         Interest rates
                         Loans under the Scheme will carry interest as per the directives on interest
                         rates issued by Reserve Bank of India from time to time. However, the
08.e
                         rates of interest to be charged on Group loans under SGSY may be linked
                         to per capita size of the loans so as to mitigate the burden on the BPL
                         beneficiaries on the analogy of IRDP group loans.
                         Loan applications
                         Time limit for disposal of applications
                         All loans granted under the Scheme are to be treated as advances under
                         priority sector. Loan applications under the Scheme should be disposed of
                         within the prescribed time limit of 15 days and at any rate not later than
08.f                     one month. To avoid pendency of applications greater coordination of
                         work at the block level between bankers and Government functionaries is
                         called for. The gap between receipt of loan applications, their sanction and
                         disbursement should be minimized and it should be ensured that
                         documentation process is kept simple to avoid hardship to the
                         beneficiaries and consequent delay in disposal of applications.
                         Rejection of loan applications
                         If some loan applications are rejected by the branch managers, the reason
                         for rejection should be clearly recorded on the application form itself and
08.g                     the relevant application should be returned to the sponsoring authority
                         immediately for their information and further action as they deem
                         necessary.

                         Loan sanctioning Powers
                         Branch Managers will be vested with adequate discretionary powers to
08.h
                         sanction proposals under the Scheme without reference to any higher
                         authority.




                                               8
          DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2       PAGE     09
SIB                                                                                 September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         Assistance to IRDP borrowers
                         The existing IRDP borrowers may also be considered for second /
09.a
                         multiple dose of assistance under SGSY if they have failed to cross the
                         poverty line because of no fault of theirs.
                         Banks may also extend credit under SGSY to non-wilful defaulter owing
                         dues up to Rs.5,000/- under IRDP. Subsidy available to the existing IRDP
09.b                     beneficiaries would be restricted to the maximum ceiling prescribed for
                         the category, less the amount already availed by the borrower under
                         IRDP.
                         Waiver of legal action before referring to DCC for forfeiture of
                         subsidy under IRDP misutilisation cases.

                         As per the existing instructions under IRDP, in case of misutilisation of
                         loan by the beneficiary, a bank branch can adjust the subsidy only after
09.c
                         concurrence of the DCC / DLRC. It has been decided that in case of IRDP
                         loans, where matters relating to defaults in repayment have been pending
                         for long, the bank branch may take decision about forfeiture of subsidy
                         and adjustment of the same against loan after obtaining approval from the
                         authority at next higher level.
                         Insurance Cover
                         Insurance cover is available for assets / live stock bought out of the loan.
                         Swarozgaris are covered under the Group Insurance Scheme. For availing
                         the group insurance coverage by the SGSY Swarozgaris, the maximum
10.a
                         age of Swarozgaris at the time of sanction has to be kept at 60 years of
                         age. The insurance coverage, however, would be for five years or till the
                         loan is repaid, whichever is earlier, irrespective of the age of Swarozgaris
                         at the time of sanction of loan.
                         Security norms
                         For individual loans upto Rs.1 lakh and group loans upto Rs.10 lakh, the
                         assets created out of bank loan would be hypothecated to the bank as
10.b                     primary collateral. In case where movable assets are not created, as in
                         land-based activities such as dug well, minor irrigation etc., mortgage of
                         land may be obtained. Where mortgage of land is not possible, third party
                         guarantee may be obtained at the discretion of the bank.




                                               9
          DEPARTMENTAL PROCEDURES MANUAL                       SECTION:P.725.2        PAGE     10
SIB                                                                                   September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         For all individual loans exceeding Rs.1 lakh and group loans exceeding
                         Rs.10 lakh, in addition to primary security such as hypothecation /
                         mortgage of land or third party guarantee as the case may be, suitable
                         margin money / other collateral security in the form of insurance policy;
                         marketable security / deeds of other property etc. may be obtained at the
10.c
                         discretion of the bank. The upper ceiling of Rs.10 lakh in respect of group
                         loans is irrespective of the size of the group or pro rata per capita loan to
                         the group. While deciding the limit for collateral security, the total project
                         cost (bank loan plus Government subsidy) should be taken into
                         consideration by banks.
                         Subsidy
                         Subsidy under SGSY will be uniform at 30 percent of the project cost,
11.a
                         subject to a maximum of Rs.7,500/-. In respect of SC / STs it will be 50
                         percent of the project cost subject to a maximum of Rs.10,000/-.
                         The group is entitled to subsidy of 50% of the project cost subject to per
11.b                     capita subsidy of Rs.10000/- or Rs.1.25 lakhs, whichever is less. There
                         will be no monetary limit on subsidy for irrigation projects.

                         Subsidy under SGSY will be back ended. Banks should not charge
                         interest on the subsidy amount. The availability of the benefit of subsidy
                         to Swarozgaris would be contingent on the proper utilisation of loan as
11.c
                         also its prompt repayment and maintaining the asset in good condition.
                         Subsidy to be maintained as per the prescribed procedure for operation of
                         Subsidy Reserve Fund accounts.

                         DRDAs will be opening savings banks accounts with the principal
                         participating bank branches for administration of subsidy. These accounts
11.d
                         are to be reconciled every three months and they will be subject to annual
                         audit.
                         Post Credit Follow-up
12.a                     Loan Pass books in regional languages may be issued to the Swarozgaris
                         which may contain all the details of the loans disbursed to them.
                         Bank branches may observe one day in a week as non public business
12.b                     working day to enable the staff to go to the field and attend to the
                         problems of Swarozgaris.




                                               10
          DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2      PAGE     11
SIB                                                                                September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         Banks should ensure through proper monitoring and verification that
                         quality assets have been procured by the Swarozgaris. Necessary
                         documents relating to acquisition of assets should be obtained by the bank
                         and also followed through visits by field staff. In case of non-procurement
12.c                     of assets by the Swarozgari in spite of reasonable time and opportunity,
                         the bank shall be free to cancel the loan and recover the moneyLegal
                         proceedings (Civil / Criminal) wherever necessary may be initiated
                         against the Swarozgari and against all members in case of SHG for
                         recovery of loan.

                         Risk Fund for Consumption Credit
                         The Scheme provides for the creation of Risk Fund with 1 percent of
                         funds at District level. Consumption loans not exceeding Rs.2000/- per
13
                         Swarozgari would be provided by the banks. Assistance to the extent of
                         10 percent of the total consumption loans disbursed by banks to the SGSY
                         Swarozgaris during the year would be provided out of this Risk Fund.

                         Repayment of Loan
                         All SGSY loans are to be treated as medium term loans with minimum
                         repayment period of five years. Instalments for repayment of loan will be
                         fixed as per the unit cost approved by the NABARD / District SGSY
14.a                     Committee. There will be a moratorium on repayment of loans during the
                         gestation period. Repayment instalments should not be more than 50
                         percent of the incremental net income expected from the project. Number
                         of instalments may be fixed taking into consideration the principal
                         amount, the interest liability and the repayment period.

                         Swarozgaris will not be entitled for any benefit of subsidy if the loan is
                         fully repaid before the prescribed lock-in period. The repayment period
                         for various activities under SGSY can broadly be categorised into 5, 7
14.b                     and 9 years depending on the project. The corresponding lock-in period
                         would be 3, 4 and 5 years respectively. If the loan is fully repaid before
                         the currency period, the Swarozgaris will be entitled only to pro-rata
                         subsidy.




                                               11
          DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2       PAGE     12
SIB                                                                                 September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         Recovery
                         Prompt recovery of loans is necessary to ensure the success of the
                         programme. Banks shall take all possible measures, i.e., personal contact,
                         organisation of joint recovery camps with District Administration, legal
                         action, etc to ensure recovery. In case of default in the payment of loan or
                         the group becoming defunct or dissolution of the group and in case the
15.a
                         bank fails to recover the entire dues in spite of all possible measures, the
                         process of forfeiture of subsidy for adjustment against dues may be taken
                         up. After getting the approval of District SGSY Committee the concerned
                         bank may adjust the subsidy against the Swarozgaris dues. If the bank is
                         able to realise any amount subsequently over and above the amount due to
                         it, the same may be returned to DRDA.
                         The banks may engage the services of NGOs or individuals (other than
                         government servants) as monitor-cum-recovery facilitators, on a
                         commission basis. A processing-cum-monitoring fee of 0.5 percent of the
15.b
                         loan amount may be charged to the Swarozgaris to meet this expenditure.
                         Prompt repayment at the Swarozgari's level, will entitle him / her to
                         waiver of the 0.5 percent processing-cum-monitoring fee.
                         The State Governments and the banks should continue their efforts for
15.c                     recovery of loans under the erstwhile IRDP and SGSY to improve the
                         recovery performance under the Scheme.
                         While reporting the recovery under SGSY, banks should not add the
                         recovery under IRDP with that of SGSY. Recovery figures under the
15.d                     SGSY should be maintained / calculated separately. Further, within
                         SGSY advances and recovery of loans under group / individual finance
                         should be maintained separately to get a proper feed back.
                         Refinance of SGSY Loans
                         Banks are eligible for refinance from NABARD for the loans disbursed
 16
                         under SGSY as per their guidelines. The eligibility for refinance is related
                         to the recovery position of the banks.
                         Role of Banks and State Agencies
                         Banks will be closely involved with Government agencies in
                         implementing, planning and preparation of projects, identification of key
                         activities, clusters, self-help groups, identification of individual
17.a
                         Swarozgaris, infrastructure planning as well as capacity building and
                         choice of activity of the SHGs, grading of SHGs, selection of
                         Swarozgaris, pre-credit activities and post credit monitoring including
                         loan recovery. The bank has the final say in the selection of Swarozgaris.




                                               12
          DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2       PAGE     13
SIB                                                                                 September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE

                         Where banks are involved as facilitators / Self Help Promoting
                         Institutions (SHPIs), the amount towards the cost of social mobilisation,
17.b                     training and capacity building of groups may be decided in the State Level
                         SGSY Committee keeping in view the local need and requirements.
                         Further, payment of the cost of social mobilisation should be based on the
                         stage of development of the group.
                         Sensitisation programmes
                         Emphasis is laid on the need for organizing training of bankers and
17.c                     district and block level officers involved in the implementation of the
                         SGSY Scheme. Banks may, therefore, organize district wise intensive one
                         day sensitisation camps / workshops for their branch officers.
                         SGSY Special Projects
                         There is a need for more methodical formulation of the special projects
                         under the Scheme so as to bring in the advantages of economies of scale,
17.d
                         faster dissemination of best practices, creating market niches and
                         accessing export markets, etc. and banks may take up special projects
                         under the Scheme on pilot basis.
                         Participation of banks in block / district level SGSY Committee
                         meetings
                         For monitoring the progress under the SGSY Scheme, committees have
                         been constituted at the block level and district level. Bank branch
17.e                     managers are members of the block level SGSY Committee and the Lead
                         Bank Officer is the convenor at the district level and district coordinators
                         of the implementing banks are members. Banks should ensure their
                         participation in the meetings of the block and district level SGSY
                         Committees.
                         Consultation Process
                         It is necessary to establish a process of consultation and to exchange /
                         share information between district and block level functionaries with
17.f                     bankers for smooth implementation of the programme. Government
                         functionaries should share the information regarding approved BPL lists
                         with banks and the banks should provide the details of defaulters under
                         IRDP / SGSY loans to the Government.




                                               13
          DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2      PAGE     14
SIB                                                                                September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         Role of DRDAs
                         DRDAs may facilitate in planning of network of SHGs by federating them
                         at appropriate level, once SHGs have reached the stage of maturity and
                         have stabilised. DRDAs should put in concerted efforts to strengthen and
                         consolidate the groups formed by various organisations as some level of
17.g                     synergy already exists and then take steps to form new groups. The
                         DRDA shall regularly monitor the progress of the groups through periodic
                         evaluations. The DRDAs may act as nodal agency for developing
                         database, which should include SHGs formed under all the schemes to
                         ensure convergence of various schemes as well as better planning for
                         training and other requirement of SHGs.
                         DRDAs may support such sensitive support mechanisms in the shape of
                         NGOs or community based organisations (CBOs) or net work of
                         community coordinators / animators or a commercial bank / Regional
17.h
                         Rural Banks / Cooperative banks functioning in rural areas or a team of
                         dedicated functionaries of the Government who are fully engaged in the
                         task of initiating and sustaining the group development process.
                         With regard to involvement of commercial bank / Regional Rural Bank /
                         Cooperative bank branches functioning in rural areas as facilitators / Self
                         Help Promoting Institutions (SHPI), effort should be made to involve only
                         such bank branches who are committed and have shown keen interest in
                         social mobilisation of poor people and could take up the responsibility of
                         social mobilisation, group formation and development of Self Help
17.i
                         Groups. Accordingly, such rural bank branches could be involved as
                         facilitators / SHPIs for social mobilisation, formation, training and
                         capacity building of SHGs formed under the Scheme. Further, involving
                         banks as SHPIs / facilitators would help in credit linkage of groups which
                         is one of the major objectives of organising SHGs and crucial for socio
                         economic empowerment and sustenance of groups.
                         Linkage with banks & grading exercise
                         During the stage of group formation, the SHG should be brought into
                         contact with the local banks through opening of savings bank account
18.a                     preferably in their service area branch. The BDO and the banker may visit
                         the SHG as often as they can and explain to the members the opportunities
                         for self-employment. The DRDAs should involve the bank functionaries
                         also in the training programme of SHGs.




                                               14
          DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2      PAGE     15
SIB                                                                                September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         In case the SHGs have been in existence prior to the SGSY under other
                         programmes and have completed six months from the date of formation
18.b
                         and it is being brought under the SGSY such groups may be subjected to
                         first grading immediately, without waiting for another six months.
                         For minor irrigation schemes, relaxation of time for the second grading
                         could be allowed if the group is found credit-worthy and the project is
18.c
                         viable. The decision in regard to the relaxation may be taken by the Block
                         Level SGSY Committee.

                         In case the SHG has been in existence prior to the SGSY under other
                         programmes and has completed one year from its date of formation and it
18.d                     is being brought under SGSY, the group may be subjected to second
                         grading directly to assess its eligibility for economic activity without
                         subjecting to first grading.

                         The choice of the agency carrying out the grading as well as the criteria
                         should be to the satisfaction of the bank. It would be desirable that bank
18.e
                         functionaries are involved in the grading exercise of groups functioning in
                         their Service Area.
                         Deputation of Bank Officials to the DRDAs
                         As a measure of strengthening of DRDAs and for promoting a better
18.f                     credit environment, deputation of bank officials to DRDAs has been
                         suggested. Banks may consider deputing officers at various levels to the
                         State Governments / DRDAs in consultation with them.
                         Supervision and Monitoring

                         Banks may set up SGSY cells at Regional / Zonal Offices. These cells
                         should periodically monitor and review the flow of credit to SGSY
                         Swarozgaris, ensure the implementation of the guidelines of the Scheme,
                         collect data from the branches and make available consolidated data to the
19.a
                         Head Office of the bank. The banks should ensure that no query from the
                         field level remains unattended by the Head Office. Monitoring of the
                         Scheme at the Head Office level of the bank may be entrusted to a Senior
                         Officer and the progress of this programme may be reviewed on a regular
                         basis by the Top Management. Banks should ensure to achieve the credit
                         mobilisation target set for each financial year without fail.




                                               15
          DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2      PAGE    16
SIB                                                                                September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                         The Scheme provides for the setting up of SGSY Committees at Block /
                         District / State and Central level. These committees will hold periodical
                         meetings wherein the implementation of the Scheme will be reviewed and
19.b
                         monitored. It is expected that banks will actively participate in these
                         meetings and maintain closer co-ordination with the different agencies
                         responsible for the implementation of SGSY.
                         The Central Level Co-ordination Committee made following
                         recommendations which were advised to the banks to ensure successful
                         implementation of the Scheme.

                                 Powers be delegated to branch managers for sanction of all SGSY
                                 applications without making any reference to higher authorities.
                                 Pending applications should be brought forward and disposed off
                                 in the first quarter of the succeeding year.
                                 Banks may explore the possibility of utilising micro-finance
                                 institutions for bridging the credit gap.
19.c
                                 Banks may take appropriate action to achieve the desired credit to
                                 subsidy ratio of 1:3.
                                 Banks may furnish a status report to Ministry of Rural
                                 Development on the under-performance of their branches in
                                 lending under the Scheme during the last two years.
                                 Banks should maintain separate record for recovery data in
                                 respect of distinct SGSY from IRDP and also utilise the Non-
                                 Public Business Working Day to attend to the problems of
                                 Swarozgaris under SGSY.




                                               16
          DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2      PAGE     17
SIB                                                                                September 11
          Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE

                         Service Area Approach
                         The District SGSY Committee set up under the Scheme has been
                         authorised to reallocate the villages, which are either not covered by any
20.a                     bank branch or where the concerned branch is not able to perform for any
                         reason whatsoever. The District SGSY Committee's decision on
                         reallocation would be placed before DCC for its consideration and further
                         necessary action.
                         The Service Area branches may be grouped block wise without disturbing
                         their Service Area identities or their obligation to prepare Village Credit
                         Plans / Service Area Plans so that borrowers will have the flexibility to
                         approach other branches in a block in the event of inability of the
                         concerned Service Area branch to adequately meet their requirements.
                         The primary responsibility for financing borrowers within the Service
                         Area will be that of the concerned Service Area branch. Borrowers will
                         first approach their Service Area branch for credit facilities and in the
20.b                     event of the concerned Service Area branch not being in a position to
                         finance them, it will be incumbent on it to give a 'No Dues Certificate' to
                         the concerned borrower, who will then be free to approach any other
                         branch in the block for credit support. If the Service Area branches do not
                         issue 'No Dues Certificate' within 15 days from the date of receipt of the
                         application, the borrower will be free to approach any other branch in the
                         block for his credit requirements without production of 'No Dues
                         Certificate' from the concerned Service Area branch. (Banks should
                         follow these Service Area Approach guidelines scrupulously.
                         Credit Mobilisation Targets
                         The State-wise credit mobilisation targets are fixed by GOI every year.
                         The State-wise targets may be allocated among commercial banks, co-
                         operative banks and RRBs by SLBCs. The SLBCs should finalise the
21.a                     targets of individual banks on the basis of acceptable parameters like
                         resources, number of rural / semi-urban branches, etc., so that each bank
                         will be in a position to arrive at its corporate target, the achievement of
                         which will be strictly monitored by RBI. Every effort should be taken by
                         the banks to achieve the credit target fixed on the above basis.
                         Operational Issues
                         Operational issues which may arise during the course of implementation
                         of the Scheme may be resolved locally in the Block / District / State Level
22
                         Committees in consultation with officials of line departments keeping
                         overall content of the Scheme in view to ensure that the smooth
                         implementation of the Scheme is not impeded.




                                               17
               DEPARTMENTAL PROCEDURES MANUAL                      SECTION:P.725.2      PAGE    18
  SIB                                                                                   September 11
               Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
  No.       SS CLK AM MGR                              PROCEDURE NARRATIVE
System of Back-end Subsidy-Stipulation of Lock-in-Period (Model)

Full Project Cost as Bank Loan - Rs.10,000/-
Subsidy Rs.5,000/-
(in case of group loans)
                     With maintenance of assets in With regular
  Loan     Lock-in-    good condition and regular   repayment                     Eligible amount of
Repayment   Period   repayment of loan instalments after (B) but                 pro-rata subsidy for
  Period  (in Years)                    Subsidy    before expiry                     Adjustment
                      At the end of                    of (A)
                                        Eligible
    (A)             (B)                               (Rs.)                             (Rs.)
        1            2              3                  4              5                   6
  5 Years         3 Years    First Year and           Nil         3rd Year      3000
                             Second Year                           4th Year     4000
                                                                   5th Year     5000
  7 Years         4 Years    First Year to            Nil          4th Year     4/7 x 5000 = 2857
                             Third Year                            5th Year     5/7 x 5000 = 3571
                                                                   6th year     6/7 x 5000 = 4286
                                                                   7th Year     7/7 x 5000 = 5000
  9 Years         5 Years    First Year to            Nil          5th Year     5/9 x 5000 = 2778
                             Fourth Year                           6th year     6/9 x 5000 = 3333
                                                                   7th year     7/9 x 5000 = 3889
                                                                   8th year     8/9 x 5000 = 4444
                                                                   9th year     9/9 x 5000 = 5000




                                                 18
            DEPARTMENTAL PROCEDURES MANUAL                         SECTION:P.725.2        PAGE     19
 SIB                                                                                      September 11
            Government Sponsored Loans - Swarnajayanti Gram Swarozgar Yojana SGSY
 No.   SS CLK AM MGR                                 PROCEDURE NARRATIVE
                           Guidelines to Branches:
23.a                       Branches should dispose off all applications received within 15 days.

                           Rejections if any should be done at RO level, and has to be intimated to the
23.b
                           Govt. agency with reasons thereof.
                           Proper registers in this regard to be maintained at all branches, invariably.
24
                           Branch officials should ensure that they actively participate in the process
                           right from selection of beneficiaries, identification of viable projects etc.
25
                           Care to be taken to include diversified & viable projects suited to the area of
                           operation.
                           The beneficiaries having genuine interest in the activity with necessary skills
26                         to be selected.

                           Targets accepted under AAP (Annual Action Plan) or otherwise should be
                           met. Applications received beyond the target should be forwarded to RO for
27
                           sanction, even if the same falls within the discretionary powers delegated to
                           the Branch Functionary.




                                             19
         DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.3      PAGE    01
SIB     Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)   September 11
No.   SS CLK AM MGR                              PROCEDURE NARRATIVE
                         Introduction
                         The Swarna Jayanti Shahari Rozgar Yojana (SJSRY) was launched on
                         01.12.1997 after subsuming the earlier three schemes for urban poverty
                         alleviation, namely Nehru Rozgar Yojana (NRY), Urban Basic Services
                         for the Poor (UBSP), and Prime Minister's Integrated Urban Poverty
01                       Eradication Programme (PMIUPEP). The key objective of the Scheme
                         was to provide gainful employment to the urban unemployed or
                         underemployed through the setting up of self-employment ventures or
                         provision of wage employment.
                         The Revised Guidelines on SJSRY came into effect from 1.4.2009.

                         Objectives
                         The objectives of the revised Swarna Jayanti Shahari Rozgar Yojana
                         (SJSRY) are :
                                Addressing urban poverty alleviation through gainful employment
                                to the urban unemployed or underemployed poor by encouraging
                                them to set up self employment ventures (individual or group),
                                with support for their sustainability; or undertake wage
                                employment;
                                Supporting skill development and training programmes to enable
                                the urban poor have access to employment opportunities opened
                                up by the market or undertake self-employment; and
02
                                Empowering the community to tackle the issues of urban poverty
                                through suitable self-managed community structures like
                                Neighbourhood Groups (NHGs), Neighbourhood Committees
                                (NHC), Community Development Society (CDS), etc.
                                The delivery of inputs under the Scheme shall be through the
                                medium of urban local bodies and community structures.

                         Thus, Swarna Jayanti Shahari Rozgar Yojana seeks to strengthen these
                         local bodies and community organizations to enable them address the
                         issues of employment and income generation facing the urban poor.




                                               1
          DEPARTMENTAL PROCEDURES MANUAL                       SECTION:P.725.3      PAGE     02
SIB                                                                                      September 11
         Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)
No.    SS CLK AM MGR                                PROCEDURE NARRATIVE
                         The target population under SJSRY is the urban poor - those living below the
                         poverty line, as defined by the Planning Commission from time to time.
                         Components
                          SJSRY will have five major components, namely -
                         (i) Urban Self Employment Programme (USEP)
                         (ii) Urban Women Self-help Programme (UWSP)
                         (iii) Skill Training for Employment Promotion amongst Urban Poor (STEP-UP)
03                       (iv) Urban Wage Employment Programme (UWEP)
                         (v) Urban Community Development Network (UCDN)

                         To accord special focus on the issues of urban poverty amongst Scheduled
                         Castes (SCs) and Scheduled Tribes (STs), a special component programme of
                         SJSRY, called the Urban Programme for Poverty reduction amongst SCs & STs
                         (UPPS), will be carved out of USEP and STEP-UP.

                         Funding Pattern and Financial Procedures
04.a                     Funding under SJSRY will be shared between the Centre and the States
                         in the ratio of 75:25.
                         For Special Category States (Arunachal Pradesh, Assam, Manipur,
                         Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Jammu & Kashmir,
04.b
                         Himachal Pradesh and Uttarakhand) this ratio will be 90:10 between the
                         Centre and States.
                         Urban Self Employment Programme (USEP)
                         Self-Employment(Individual)through Setting up of Micro-Enterprises
                         under USEP:
05.a
                         Identification of Beneficiaries
                         Only those identified and listed on the basis of the survey.

                         Eligibility
05.b
                         Urban poor living below the poverty line, in any city / town.
                         Age
05.c                     Should be of minimum 18 years at the time of applying for Bank Loan.

                         Residency
05.d                     Residing in the town for at least three years.




                                                2
          DEPARTMENTAL PROCEDURES MANUAL                           SECTION:P.725.3     PAGE     03
SIB      Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)     September 11
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Defaulter
05.e                      Should not be a defaulter to any nationalized bank / financial institution /
                          cooperative bank.
                          Nature of Activities
                          An illustrative list of activities is as follows :
                          Town services requiring no special skills
05.f
                          Tea shop, News paper / magazine shop, Ice cream vendor, Milk vendor,
                          Pan / cigarette shop, Fruit / vegetable vending, Laundry work, Rickshaw-
                          pulling, etc.
                          Town services requiring special skills

                          Repairing of radio / TV / refrigerator / air cooler / air conditioner / mobile
                          phone / cycle / automobile / diesel engines / pump / motor / watches /
05.g                      electrical / electric domestic appliances; Catering, Dry cleaning, Furniture
                          repair, Motor winding, Shoe repair, Book binding as well as skills
                          pertaining to House construction / upgradation such as plumbing,
                          carpentry, masonry, painting and polishing, tile laying, glass pane fixing,
                          electrical installation, etc.

                          Micro-manufacturing units requiring skills

05.h                      Making / manufacturing of washing powder, agarbatti, bangles, garments,
                          plastic toys, footwear, wooden / steel furniture, saree printing, weaving,
                          pottery, blacksmithy, utensil / steel fabrication, food processing, ball pen
                          making etc.

                          Assistance should also be made available under agricultural and allied
05.i                      activities / small scale services / small business activities e.g. general
                          merchant shop, kirana shop, building materials shop, ready-made
                          garments shop, dairy units, etc.




                                                  3
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.3      PAGE     04
SIB                                                                                  September 11
         Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Training

                          No training should be required if the beneficiary has already undergone
                          training in a skill / trade from a known institution, registered NGO / VO,
                          provided requisite certificate is produced to that effect.

                          Training should also not be necessary if the beneficiary has learnt the
05.j                      activity such as pottery making, cobblery, carpentry, ironsmithy, etc. from
                          heredity / other sources. This aspect should however be certified by ULB
                          before recommending / forwarding application to bank.

                          Training should also not be necessary if a beneficiary has learnt a
                          particular trade from private / public registered company, as apprentice or
                          employee; certificate from the private / public registered company will
                          have to be submitted.
                          Project Cost

05.k
                          The maximum unit project cost for individual cases can be Rs.200,000/-.
                          If two or more eligible persons join together in a partnership, the project
                          with higher costs would also be considered provided share of each person
                          in the project cost is Rs.200,000 or less.
                          Subsidy
                          Subsidy would be provided at the rate of 25% of the project cost subject
05.l                      to a ceiling of Rs.50,000/- per beneficiary. In case more than one
                          beneficiary join together and set a project under partnership, subsidy
                          would be calculated for each partner separately.
                          Margin Money
05.m
                          Each beneficiary is required to contribute 5% of the project cost as margin
                          money in cash
                          Loan (inclusive of subsidy)

                          95% of the project cost would be made available by Banks (25% Subsidy
05.n                      amount and 70% of the project cost as Loan sanctioned by bank at the rate
                          of interest applicable to such priority sector lending fixed by the Reserve
                          Bank of India, from time to time). The interest will be charged only on the
                          loan amount.




                                                4
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.3        PAGE    05
SIB                                                                                    September 11
         Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Collateral on Bank Loans
05.o                      The loans would not require any collateral. Only assets created under the
                          programme would be hypothecated / mortgaged / pledged to the bank .
                          Repayment
05.p                      Repayment schedule ranges from 3 to 7 years after initial moratorium of 6
                          to 18 months as decided by Bank.
                          The CDS / Town UPA Cells will extend help to banks for ensuring
05.q
                          regular repayment of loans as per rules.
                          Urban Women Self-help Programme (UWSP)
06.0                      Self-Employment (Group) through Setting up of Micro-Enterprises
                          under
                          Identification of Beneficiaries:
06.a
                          Only those identified and listed on the basis of survey.
                          Eligibility:

                          Urban poor women living below the poverty line, in any city / town.
06.b
                          Preferably, the senior and better-performing urban women self help
                          groups having credit management abilities and having skills in the
                          proposed activity may be accorded thrust.
                          Age:
06.c
                          Members should be of minimum 18 years at the time of the group
                          applying for Bank Loan.
                          Membership of the Group
06.d
                          Minimum number of women in a group is five.
                          Defaulter
06.e                      Should not be a defaulter to any nationalized bank / financial institution /
                          cooperative bank.
                          Nature of Activities
                          Any group activity / enterprise development for income generation by the
06.f
                          urban poor women, including the activities mentioned for the Individual
                          enterprises.
                          Project Cost
06.g
                          No maximum limit.




                                                5
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.3      PAGE    06
SIB                                                                                  September 11
         Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Subsidy
06.h                      Subsidy would be provided at the rate of 35% of the project cost subject
                          to a ceiling of Rs.3.00 lakhs or Rs.60,000/- per beneficiary.
                          Margin Money
06.i                      Groups may be encouraged to contribute 5% of the project cost as margin
                          money in cash.
                          Loan
                          Loan (excluding the subsidy amount and margin money, if any, from the
06.j                      project cost) would be sanctioned by the banks at rates of interest
                          applicable to such priority sector loans fixed by the Reserve Bank of India
                          from time to time. The interest will be charged only on the loan amount.

                          Collateral on Bank Loans:
06.k                      The loans would not require any collateral guarantee. Only assets created
                          under the programme would be hypothecated / mortgaged / pledged to the
                          bank advancing the loans.
                           Repayment
                           Repayment schedule ranges from 3 to 7 years after initial moratorium of
06.l                       6 to 18 months as decided by bank.
                           The CDS / Town UPA Cells will extend help to bank for ensuring regular
                           repayment of loans as per rules.
                          Urban Wage Employment Programme (UWEP)

                          This programme seeks to provide wage employment to beneficiaries
                          living below the poverty line within the jurisdiction of urban local bodies
                          by utilising their labour for construction of socially and economically
                          useful public assets. These assets may be Community Centres,
07.a
                          Stormwater Drains, Roads, Night Shelters, Kitchen Sheds in Primary
                          Schools under Mid-day Meal Scheme and other community requirements
                          like Parks, Solid Waste Management facilities, as decided by the
                          community structures themselves. The Urban Wage Employment
                          Programme (UWEP) will be applicable only to towns / cities with
                          population upto 5 Lakhs, as per the 1991 Census.
                          UWEP will provide opportunities for wage-employment, especially for
                          the unskilled and semi-skilled migrants / residents by creation of
07.b                      community assets. Special emphasis will be on the construction of
                          community assets in low-income neighbourhoods with a strong
                          involvement and participation of local communities.




                                                6
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:)P.725.3       PAGE     07
SIB                                                                                    September 11
         Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          The material : labour ratio for works under this programme shall be
                          maintained at 60:40. However, States / UTs can relax this material :
07.c                      labour ratio up to 10% (either way), wherever absolutely necessary. The
                          prevailing minimum wage rate, as notified from time to time for each
                          area, shall be paid to beneficiaries under this programme.

                          Community Development Societies (CDSs) shall survey and draw up a
                          list of available basic minimum services in their areas. Missing basic
07.d
                          minimum services shall be first identified. Other requirements of physical
                          infrastructure shall be listed thereafter.
                          As far as possible, works are to be executed through CDSs, under the
                          general control and supervision of the ULBs. ULBs are expected to
                          maintain a close watch over the quality of construction. Work must be
                          done departmentally and detailed guidelines as regards maintenance of
                          muster rolls, social audit etc. will be issued in this regard by the concerned
07.e
                          State / UT Governments. To the extent possible, even the material
                          component of the work should be done departmentally. Where
                          departmental work is not possible due to the specialized nature of the
                          work involved, such material component of the work may be got done
                          through agencies by following proper tendering / Government procedure.
                           In all cases it must be ensured that the works undertaken under UWEP
                          are brought to a safe stage and no work is left incomplete or pending half-
                          way. In case of cost escalation, or expansion in the nature of the work, or
                          increase in the project estimate for any other reason whatsoever, and if
                          additional funds are not available under this programme, it shall be the
07.f                      basic responsibility of the sanctioning authority / implementing authority
                          i.e. Urban Local Body / District Urban Development Agency to ensure the
                          completion of such works by bringing in additional resources from other
                          programmes / own resources, if so required.




                                                 7
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.3      PAGE    08
SIB                                                                                  September 11
         Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Skills Training for
                          Employment Promotion Amongst Urban Poor (Step-Up)

                                  Skill Training to be linked to accreditation, certification and
                                  preferably be taken on Public-Private-Partnership (PPP) mode
                                  with the involvement of reputed institutions.
                                  The size of a training class may not be more than 40.
                                  The total training period for skill upgradation (including
                                  apprenticeship, if any) can be upto 6 months.
                                  Wherever feasible, toolkits may also be provided to trainees who
                                  complete the training satisfactorily.
08.a
                                  The cost of toolkit has been included in the average training cost
                                  of Rs. 10,000/- per capita. However, in case the toolkit cost
                                  exceeds the above ceiling, there is no objection to the excess
                                  amount being met from funds other than this programme funds or
                                  bank loan or even as beneficiary's contribution.
                                  Monthly expenditure on training per trainee including material
                                  cost, trainer's fees, toolkit cost, other miscellaneous expenses to
                                  be incurred by training institution as well as monthly stipend to
                                  trainee, may vary depending upon the trade and duration of
                                  training. States / UTs should issue guidelines in this regard.




                                                8
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.3      PAGE     09
SIB                                                                                  September 11
         Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Skill Development Process :

                          The following process may be adopted for developing / upgrading skills
                          of the urban poor :

                              1. Market Scan / Surveys to identify the needs of industry, business
                                  and service sectors and emerging job opportunities - local,
                                  district, state and national and upgrade the information at regular
                                  intervals;
                              2. Livelihoods Survey, Training Needs Assessment, Baseline and
                                  identification of Gaps;
                              3. Identification of Lead (National or State) and Nodal (Regional /
                                  City Level) Institutions - finalize modalities for accreditation,
                                  preparation of modules, training of trainers, mentoring,
                                  certification, training, etc.
                              4. Memorandum of Agreement between State Nodal Agency /
                                  Urban Local Body (Urban Poverty Alleviation Cell) and Lead /
                                  Nodal Training Institutions and between Lead and Nodal
08.b
                                  institutions;
                              5. Guidelines for Accreditation by Lead Institution, accreditation
                                  process and identification of nodal training institutions / agencies
                                  to undertake training;
                              6. Memorandum of Agreement between Lead Institution and Nodal /
                                  training institutions / agencies including eminent agencies or
                                  institutes in the private sector;
                              7. Selection of trainees by the ULBs with the help of Community
                                  Structures / Organisations / NGOs based on their education, level
                                  of training, experience, aptitude etc.
                              8. Preparation of Training Calendar and assignment of Trainees to
                                  Institutions, Conduct of Training, Examination, Certification
                                  Process, Apprenticeship with Industry; and Placement
                                  Coordination
                              9. Monitoring, Quality Control, Review, Evaluation and Corrective
                                  Measures
                              10. Post-training Handholding.




                                                9
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.3       PAGE     10
SIB                                                                                   September 11
         Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Skills Training Institutes :

                                           Focus will be on skills of high-value for which there is
                                           market demand. Skills may be differentiated in categories
                                           on the basis of entry level qualifications.
                                           Matriculate pass candidates can be provided technical
                                           vocational training of high standard whereas 8th pass
                                           candidates can be provided training requiring less
                                           technical knowledge.
                                           Persons below 8th pass can be provided specially
                                           designed training which does not generally require
                                           technical skills.
                                           States / UTs may empanel activity-specific lead institutes
                                           (an eminent National or State Government institute like
                                           IIT or NIT for each specific technical vocational skill)
                                           supported by regional / city level nodal institutions, which
                                           will work closely with the Lead Institution.
08.c                                       The Lead Institution will be responsible for the
                                           accreditation of training institutes in the fields concerned
                                           (public and private both) and certification.
                                           The Nodal (regional / city level) institutes will be
                                           responsible for training of trainers, supervision of
                                           training, mentoring and placement coordination.
                                           The Lead and Nodal institutions will undertake
                                           preparation of high quality training modules,
                                           development of curriculum standards, materials for
                                           training of instructors and trainees and undertake
                                           certification process for the particular skills.
                                           Public-Private-Partnership models for imparting skills
                                           training will be encouraged.

                          Note : 1

                          Guidelines for undertaking skill development / upgradation will be issued
                          by the Government of India




                                                10
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.3      PAGE    11
SIB                                                                                  September 11
         Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Community - Based Structures to be Set up under SJSRY

                          The community based organizations include:
09.a
                          Neighbourhood Groups (NHGs);
                          Neighbourhood Committees (NHCs)
                          Community Development Society (CDS).
                          Neighbourhood Group (NHG)

                          This is an informal association of women living in a mohalla or basti or
                          neighbourhood group of manageable size (preferably of 10 to 40 to
                          represent urban poor / slum families). Geographic contiguity and
09.b                      homogeneity should be the basis to carve out the boundaries of the NHGs.
                          At least one woman resident among them who is willing to serve as a
                          volunteer should be selected as a Resident Community Volunteer (RCV)
                          through community consensus or election or any other democratic
                          process. There should be a change or rotation (if need be) of such
                          volunteers at periodical intervals.
                          The responsibilities of RCVs include :
                                  to serve as a channel of information and communication among
                                  the families in the cluster;
                                  to represent the views of the Group in the Neighbourhood
                                  Committee, Community Development Society and other forums;
                                  to support planning, implementation and monitoring of activities
09.c
                                  at the neighbourhood level;
                                  to foster and encourage self-help, mutual help and participation in
                                  community improvement programmes; and
                                  to motivate the community for being members of self-help groups
                                  / thrift and credit society; and to contribute to community
                                  development fund.




                                                11
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.3      PAGE     12
SIB                                                                                  September 11
         Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Neighbourhood Committee (NHC)

                          A Neighbourhood Committee (NHC) is a more formal association of
                          women from the Neighbourhood Groups located in close proximity and as
                          far as feasible within the same electoral ward. The Committee should
                          consist of all the RCVs from the Neighbourhood Groups as executives
09.d                      (with voting right). There can also be provision for honorary membership
                          without a voting right for Community Organisers (COs), representatives
                          from other sectoral programmes in the community like ICDS supervisor,
                          school teacher, urban social health activist, ANM etc. The Convener /
                          President of the NHC will be selected / elected by the executive members
                          of the NHC. The Convener will ensure that the meetings of the NHC are
                          convened on regular basis.
                          The responsibilities of the NHC would include :

                                  to identify local problems and priorities;
                                  to provide suggestions for group involvement in meeting the
                                  community needs and goals (mini-plans);
                                  to support local action with partnership of responsible agencies
                                  including community contracts;
                                  to provide feedback to agencies on programme effectiveness and
                                  out-reach especially for children and women;
                                  to develop community capacity through training in association
09.e                              with COs, NGOs and other sectoral departments;
                                  to develop community-based thrift and credit system as well as
                                  neighbourhood development fund;
                                  to facilitate the recovery of loans from the beneficiaries in time;
                                  and
                                  to assist / carry out community surveys in accordance with the
                                  guidelines.
                                  The NHC may be registered under the Societies Registration Act,
                                  or other appropriate Acts, if so desired. If registered, these NHC
                                  may also apply for grants-in-aid under various schemes.




                                                12
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.3        PAGE     13
SIB                                                                                    September 11
         Government Sponsored Loans - Swarna Jayanti Shahari Rozgar Yojana (SJSRY)
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Community Development Society (CDS)

                          The CDS is a formal association of all the Neighbourhood Committees at
                          the town level based on common goals and objectives. The CDS may
                          consist of elected / selected representatives of NHCs as executive
                          members (with voting right); and other members with honorary
09.f                      membership (with no voting right) which may include community
                          organizers, representatives of NGOs, sectoral departments, leading
                          citizens, elected representatives of the area and other resource persons.
                          The Community Development Society (CDS) should be registered under
                          the Societies Registration Act or other appropriate Act to provide access
                          to grant-in-aid under various schemes and for a wider financial and credit
                          base.
                          The responsibilities of CDS would include :

                                  to represent needs of all the communities, especially women and
                                  children at various levels and forums;
                                  to liaise and link-up with agencies and departments to promote
                                  action in the community towards fulfillment of their needs;
                                  to identify specific training needs and arrange for capacity
                                  building of their organizations;
                                  to facilitate community surveys to be carried out to identify the
                                  genuine beneficiaries for economic and shelter benefits;
                                  to prepare community development plans and proposals, mobilize
09.g
                                  resources from the community, town or other sectoral
                                  departments for implementation of such plans;
                                  to extend help to Banks in coordination with city / town UPA
                                  Cell, for ensuring repayment of loans by the beneficiaries in time;
                                  to create small community assets in low-income areas in
                                  consultation with town city / town UPA Cell and Urban Local
                                  Body (ULB); and
                                  to develop and implement proposals for support from Community
                                  Participation Fund / Community Development Network under
                                  JNNURM and other programmes.

                          Community structures at different levels will be self-managed and may
09.h                      have volunteers in charge of groups of activities such as basic
                          infrastructure, health, education, skill and livelihoods, thrift & credit etc.




                                                13
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.4     PAGE     01
SIB            Government Sponsored Loans – Differential Rate of Interest (DRI)     September 11
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
01
                          Background

                          Government of India has formulated a scheme for extending financial
01                        assistance at concessional rates to selected low income groups, for
                          productive endeavours. The scheme known as the Scheme of Differential
                          Rates of Interest (DRI), is required to be implemented also by private
                          sector banks all over the country.
                          Target
02.a
                          Banks should lend under the scheme a minimum of 1% of their aggregate
                          advances as at the end of previous year.
                          In order to ensure that the weaker sections in the rural areas derive
                          maximum benefit under the scheme and bulk of the advances are not pre-
                          empted by urban / metropolitan areas, it should be ensured that not less
02.b
                          than 2/3rd of the advances under this scheme are routed through rural and
                          semi-urban branches. Correspondingly, not more than 1/3rd of credit
                          under the scheme may go from urban and metropolitan branches.
                          To ensure that persons belonging to Scheduled Castes (SC) and Scheduled
                          Tribes (ST) get their due share of benefits under the scheme, not less than
02.c
                          40% of the bank credit under the scheme should flow to the eligible
                          borrowers belonging to SC and ST.




                                                 1
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.4       PAGE     02
SIB            Government Sponsored Loans – Differential Rate of Interest (DRI)       September 11
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Categories of Eligible Persons
                          Persons who satisfy the income and land holding criteria and broadly fall
                          in the categories indicated below will be eligible to the benefits of the
                          scheme. (The list is only illustrative and not exhaustive).

                                  Scheduled Tribes, Scheduled Castes and others engaged on a very
                                  modest scale, in agriculture and / or allied agricultural activities.
                                  People who themselves collect or do elementary processing of
                                  forest products and people who themselves collect fodder in
                                  difficult areas and sell them to farmers and traders.
                                  People physically engaged on a modest scale in the fields of
03.a                              cottage and rural industries and vocations. Illustrative examples
                                  are cutting cloth and sewing garments, making reasonably cheap
                                  eatables, home delivery service of articles and commodities of
                                  daily use, running wayside tea stalls, plying self-owned manual
                                  rickshaw and cycle rickshaws, repairing of shoes / sandals mainly
                                  by hand, basket making by hand, etc.
                                  Indigent students of merit going in for higher education who do
                                  not get scholarships / maintenance grants from Governmental or
                                  educational authorities.
                                  Physically handicapped persons including blind persons pursuing
                                  a gainful occupation.




                                                 2
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.4        PAGE     03
SIB            Government Sponsored Loans – Differential Rate of Interest (DRI)        September 11
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Eligibility Criteria:

                          The categories of persons enumerated in Section 01.e above will be
                          eligible to the benefits of the scheme even if they have no tangible
                          security of any worth to offer or cannot produce a security / guarantee of a
                          well to do party, provided they satisfy the criteria laid down below :

                          1. Family income of the borrower from all sources does not exceed
03.b
                                  Rs.24,000/- per annum with effect from 10.04.2008 (earlier limit
                                  was Rs.7,200/-) in urban or semi-urban areas or
                                  Rs.18,000/- per annum, with effect from 10.04.2008 (earlier limit
                                  was Rs.6,400/- in rural areas.

                          2. Does not own any land or the size of land holding does not exceed one
                             acre in the case of irrigated land and 2.5 acres in the case of unirrigated
                             land. Members of SC / ST are eligible for loan irrespective of their land
                             holdings, provided they satisfy the other criteria.




                                                  3
         DEPARTMENTAL PROCEDURES MANUAL                         SECTION:P.725.4      PAGE     04
SIB           Government Sponsored Loans – Differential Rate of Interest (DRI)       September 11
No.   SS CLK AM MGR                              PROCEDURE NARRATIVE
                         3.The beneficiary can be helped to rise above his present economic level
                           through a productive endeavour with assistance from banks, the
                           productive endeavour being such as would become economically viable
                           within a period of, say,3 years.

                         4. The beneficiary does not incur liability to two sources of finance at the
                            same time.

                         5. Works largely on his own and with such help as other members of his
                           family or some joint partners may give to him and does not employ paid
                           employees on a regular basis.

                         Note :1

                                   It is not intended that a borrower should be required to produce
                                   documentary evidence to establish his eligibility under the
                                   scheme. It is expected that the officials of the bank at the branch
                                   level would be conversant with the economic and other
                                   circumstances of the borrower. They may make such local
                                   enquiries as may be required in each case before sanctioning the
                                   loan bearing in mind the conditions mentioned.
                                   The income eligibility criteria for determining entitlement under
                                   DRI Scheme are to be applied only at the time of sanction and / or
                                   fresh loan on repayment of earlier loan.




                                                 4
         DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.4        PAGE     05
SIB           Government Sponsored Loans – Differential Rate of Interest (DRI)        September 11
No.   SS CLK AM MGR                              PROCEDURE NARRATIVE
                         Terms & Conditions of Loan
                         Quantum
                         Amount of loan will depend on the particular scheme proposed to be
                         financed and should be adequate to enable the borrower to finance his
                         requirements without having to borrow funds from another source.

                         The maximum amount per beneficiary should not exceed Rs.15,000/- with
                         effect from 13.06.2007 (earlier limit was Rs.6,500/-). This will include
                         term loan and / or working capital.

                         Banks should assess the credit requirements realistically and sanction
04
                         accordingly by way of term loan and / or working capital.

                         In exceptional cases, particularly for institutions and in the case of
                         indigent students of merit, higher amounts may be considered.

                         DRI loans to institutions involving higher quantum of loan exceeding the
                         normal stipulated ceiling may be sanctioned by the Board of Directors.

                         Where a small scale industrialist, village artisans, etc. in the decentralised
                         sector satisfies the eligibility criteria under this scheme, a composite loan
                         not exceeding Rs.6,500/- may be sanctioned.
                         Delivery:
05                       Both working capital and term loan will be admissible in accordance with
                         the specific requirement of the borrower.
                         Margin:
                         Requirement of margin money may not be insisted upon as the category
06
                         of borrowers belong to the weaker strata of society who may not always
                         be in a position to furnish margin money.
                         Rate of Interest:
                         Rate of interest will be uniformly fixed at 4% per annum. It should be
07
                         ensured that the interest on current dues is not compounded. All advances
                         under the DRI scheme should be exempted from the levy of penal rate.




                                                5
         DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.4       PAGE        06
SIB           Government Sponsored Loans – Differential Rate of Interest (DRI)       September 11
No.   SS CLK AM MGR                              PROCEDURE NARRATIVE
                         Tenor/Repayment:
                         Term loan for the acquisition of fixed assets shall not exceed 5 years,
                         including a grace period not exceeding 2 years on the repayment of
                         principal. The repayment schedule will be worked out in each case having
08
                         regard to the nature of the activity of the borrower and the economics of
                         the scheme. In assessing the surplus for the payment of interest and
                         principal, due allowance should be made for the sustenance requirements
                         of the borrower himself.
                         Security:
                         The assets purchased with the loan may be hypothecated to the bank. In
09
                         addition, in appropriate cases of loans to a homogeneous group of
                         borrowers, group guarantees may be accepted.
                         Insurance:
10                       The cost of insurance of the assets charged to the bank, if considered
                         necessary, should be borne by the bank.
                         Initial moratorium/Repayment holiday:

                         The bank may consider some suitable initial moratorium in repayment, if
                         so warranted.
11
                         Where part finances are covered by seed / margin money, banks may
                         disburse the advance sanctioned by them to the borrowers even before the
                         receipt of Government assistance. The amount of seed / margin money
                         when received may be credited to the loan account of the borrower.
                         Finance to / through Institutions

                         Following institutions will be eligible for credit under the scheme :

                         Orphanages and Women's Homes where saleable goods are made and for
12                       which no adequate and dependable source of finance e.g., endowments or
                         regular charities exist.

                         Institutions for physically handicapped persons including mentally
                         retarded persons pursuing a gainful occupation where some durable
                         equipment and / or continuous supply of raw material is useful.




                                                6
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.4       PAGE     07
SIB            Government Sponsored Loans – Differential Rate of Interest (DRI)       September 11
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Institutions for physically handicapped persons, orphanages and Women's
                          Homes will be exempted from income and land holding criteria. However,
                          it should be ensured that these institutions utilise the funds for productive
                          purposes only and not for meeting their normal administrative and
                          establishment expenses. It is also necessary to verify from independent
13
                          sources about the genuineness of these institutions.

                          The maximum amount of borrowings from such institutions will be so
                          calculated that the assistance per beneficiary does not exceed the ceiling
                          fixed for individuals under the scheme.
                          State Corporations for SC and ST:

                          Banks may route credit under the scheme through State Corporations for
                          the welfare of SC / ST, subject to the beneficiaries of the corporations
                          meeting the eligibility criteria and other terms & conditions indicated in
                          the scheme.

                          The corporations themselves will be exempt from the income criteria.
14.a
                          Finances will be made available to the corporations only against specific
                          and commercially viable schemes formulated by them. Further, the
                          corporations will not add any service charges and the loans will flow to
                          the beneficiaries at 4% per annum rate of interest.

                          The corporations will be responsible for repayment of the loan on the due
                          dates, irrespective of the state of recovery from the beneficiaries.
                          It will be the responsibility of the corporations to ensure that funds are
                          utilised for the productive purposes only for which they have been
14.b                      sanctioned and not for meeting their normal running expenses. The cost of
                          establishment and other expenditure incurred for the implementation of
                          the scheme shall be borne by the corporations / State Governments.
                          Since the advances to corporations will not be eligible for guarantee cover
14.c                      from the Credit Guarantee Corporation of India Ltd., State Governments
                          may have to provide guarantee to the lending banks.
                          If a corporation fails to pay the instalments of loans or violates any terms
14.d                      & conditions stipulated in the scheme, it may be liable to forfeit its right
                          for further finance.




                                                 7
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.4      PAGE     08
SIB            Government Sponsored Loans – Differential Rate of Interest (DRI)      September 11
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE
                          Co-operative Societies and Large-sized Multipurpose Societies
                          (LAMPS) for Tribals

                          Banks may route credit under the scheme through Co-operative Societies /
15
                          Large-size Multipurpose Societies (LAMPS) organized specifically for
                          the benefit of the tribal population, in areas identified by the Government
                          on the same terms and conditions as are applicable to State-owned
                          Corporations for the welfare of Scheduled Castes and Scheduled Tribes.
                          State Minority Finance / Development Corporations

16                        Banks may route loans under the scheme through the State Minority
                          Finance / Development Corporations meeting the eligibility criteria and
                          other terms and conditions prescribed under the scheme.
                          Housing Finance to SC / ST

                          The housing loans up to Rs.20,000/- with effect from 13.06.2007 (earlier
17                        limit was Rs.5,000/-) (direct and indirect advances) to SC / ST
                          beneficiaries may be granted by the banks under the DRI scheme, subject
                          to the beneficiaries satisfying the income criteria stipulated under the
                          scheme.
                          Finance to Physically Handicapped Persons:

                          The physically handicapped persons including blind persons may be
                          assisted for acquiring aids, appliances and equipment (needed especially
18.a
                          by students for pursuing studies and vocational training, e.g. Braille
                          typewriters for the blind) such as artificial limbs, hearing aids, wheeled
                          chairs, etc. to the extent of their actual cost but not exceeding Rs.5,000/-
                          under the DRI scheme.
                          This assistance will be independent of the productive loan limit of
18.b
                          Rs.6,500/- eligible under the scheme.
18.c                      Other terms & conditions stipulated under the scheme must be fulfilled.
                          Dual Financing:

                          The DRI scheme, IRDP (since replaced by SGSY) and SEEUY (since
19.a                      replaced by PMRY) scheme are mutually exclusive. Under no
                          circumstances, a beneficiary once assisted under a subsidy / concessive
                          interest rate linked Government programmes should be assisted under the
                          same programme or other similar subsidy linked programme.




                                                 8
          DEPARTMENTAL PROCEDURES MANUAL                        SECTION:P.725.4     PAGE     09
SIB            Government Sponsored Loans – Differential Rate of Interest (DRI)     September 11
No.    SS CLK AM MGR                              PROCEDURE NARRATIVE

                          However, SC / ST beneficiaries availing of housing finance up to
                          Rs.5,000/- under DRI scheme may be considered for assistance under DRI
19.b                      scheme up to Rs.6,500/- (in addition to housing finance of Rs.5,000/-) or
                          under IRDP (since replaced by SGSY) / SEEUY (since replaced by
                          PMRY), according to their eligibility under the respective scheme.

                          Loans granted for the purpose of repairs to damaged houses to the
                          members of SCs / STs alone can be reckoned as housing loans granted
                          under DRI scheme, subject to the following conditions :

                                  the beneficiary satisfies the income criteria stipulated under the
                                  DRI scheme;
                                  the assistance towards house repairs does not exceed Rs.5,000/;
19.c
                                  and the housing loan granted as per above two conditions has
                                  been reckoned as assistance extended under DRI scheme only
                                  once. In other words, a beneficiary who has availed of housing
                                  loan under DRI scheme earlier, will not be eligible for a second
                                  loan either for housing or for repairs to house even if he may have
                                  repaid the earlier loan sanctioned to him.

                          Advances against sensitive commodities to the borrowers satisfying all the
20                        conditions under DRI scheme shall be exempted completely from the
                          provisions of Selective Credit Control.




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