vishesh microfinance yojana

Vishesh Microfinance Yojana (VMY)

Vishesh Microfinance Yojana For Disabled Persons NHFDC

1. Introduction

Since 1997, NHFDC has been financing income-generating schemes for disabled people through State Channelizing Agencies for their socio-economic empowerment (SCAs). NHFDC has also established additional lending channels by signing Memorandum of Agreements (MoAs) with Public Sector Banks (PSBs), Regional Rural Banks (RRBs), and Other Institutions in order to broaden its reach.

NHFDC intends to reach out to the target group’s unbanked population through last-mile financers at reasonable/moderate interest rates in order to promote sustainable and inclusive livelihoods. This would include, among other things, funding projects that make it easier for Divyangjans to live comfortably in society.

NHFDC believes that collaborating with Micro Finance Institutions (MFIs) as well as state-level organizations such as Livelihood Missions and Swachchh Bharat Missions, among others, would be an effective and beneficial approach to promoting collective action of the target group through the use of a value chain approach in clusters, which can significantly contribute to economic empowerment and general well-being of the target group. Efforts would also be made in collaboration with other development partners to mobilize assistance for product quality improvement, marketing, and value chain development.

2. Objective

To provide prompt and need-based finance for the target group and activities at a reasonable interest rate through NBFC-MFI, Section-8-MFI, NGO-MFI, SHG Federations, state Government Missions, and other state-level organizations in order to pursue small/micro business and development activities.

3. Eligibility Criteria

For such categories of microfinance lending organizations, eligibility norms as followed by SIDBI or NABARD from time to time would be followed.

The Loan Screening Committee of the NHFDC shall deliberate and recommend eligibility norms based on the prevailing eligibility norms of the SIDBI or NABARD.

4. NHFDC Implementing Partner Relationship

Organizations that meet the eligibility criteria may be appointed as NHFDC Implementing Partners for Microfinance loans. The contractual relationship between NHFDC and the Implementing Partner shall be governed and guided by the parties signing an Agreement strictly in accordance with the NHFDC Policy and the terms and conditions of the Agreement.

Regardless of what is stated above (including Paragraph 3), the scheme may also be implemented through NRLM/State Livelihood Mission Cluster Level Federations (CLFs) and NHFDC State Channelizing Agencies.

5. Security

Implementing Agencies shall provide NHFDC with the following security for timely repayment of installments of the loan sanctioned under this Agreement, together with interest thereon, when seeking disbursement from NHFDC:

a. Bank Guarantee from a Public Sector Bank or Fixed Deposits from a Public Sector Bank in the name of “NHFDC” equals 10% or the prevailing norms of the SIDBI/ NABARD, whichever is greater, of the loan amount to be disbursed to them.

The Bank Guarantee/Fixed Deposit will be valid until all NHFDC dues have been paid in full or fully discharged by the Implementing Agencies. If the Implementing Partner has made a Fixed Deposit to the NHFDC, the accrued interest on the instrument, as well as the deposit instrument, will be released to the Implementing Partner only after the loan repayments have been successfully completed. In the event that Implementing Agencies default for the entire or a portion of the amount advanced under this Agreement, the Bank Guarantee will be invoked and the Fixed Deposits, along with accrued interest, will be encashed by NHFDC.

However, no such security (in the form of a bank guarantee or a fixed deposit) shall be required if the scheme (VMY) is implemented through Cluster Level Federations (CLFs) under the supervision of NRLM/SRLM. Furthermore, for SCA, no additional guarantee should be required if the existing state government guarantee is sufficient.

b. Post-dated cheques (PDCs) in the amount of the remaining balance are required as security.

The PDCs must be obtained in accordance with the scheme’s repayment schedule. Furthermore, one undated PDC equal to 90% of the amount to be disbursed will be obtained.

c. Exclusive first charge by hypothecation on all book debts and receivables resulting from NHFDC loans. Borrowers must submit a quarterly CA certificate authenticating the list of borrowers/statement of book debts, as well as the end-use/purpose of the loan, the amount outstanding, and the age breakdown of overdue.

6. Unit Cost

The unit cost of the Project shall not exceed Rs.60,000/-.

7. Quantum of Assistance

The NHFDC will contribute up to 90% of the project costs. The remaining 10% will be contributed by the Implementing Agencies or other organizations acting as NHFDC’s implementing partner, as well as beneficiaries.

8. Interest Rate

NHFDC may charge the Implementing Agencies the rate of interest that it determines from time to time. NHFDC shall allow the Implementing Agencies to add a spread, as determined by it in the rate of interest, to the rate of interest charged by the Implementing Agencies to the Persons with Disabilities (PwD) to be assisted. In no case shall the Implementing Agencies charge PwD a higher rate of interest than that prescribed by the Corporation’s lending policy on the amount refinanced by NHFDC.

A uniform interest rate of 12.50 percent p.a. be prescribed for all PwDs, eliminating gender-based interest rates.

Similarly, the NHFDC lending rate would be 4.50 percent p.a., with a margin of up to 8.00 percent for the partner agency. In other words, the scheme’s pattern of charging interest will be as follows:

NHFDC to Implementing AgenciesInterest Spread to Implementing AgenciesImplementing Agencies to Beneficiaries
4.50% P.AUpto 8%Upto 12.50% P.A

Interest subvention shall be allowed by NHFDC as under:-

For implementing partner:

The implementing partners would be eligible for a 1% interest subsidy if both of the following conditions were met:

a) Timely full repayment of dues on yearly basis and,

b) Secure NHFDC’s loan exposure by providing 100% security

Not Applicable for CLF.

For PwD:

NHFDC will credit a 1% interest subsidy directly to the PwD borrower’s account via Direct Benefit Transfer (DBT). The DBT will be made after receiving confirmation from the implementing partner that the PwD (Beneficiary) will make timely full repayment of dues on a yearly basis, subject to the implementing partner making full repayment.

9. Repayment Period

The loan amount must be repaid in quarterly installments over a maximum of three years from the date of each disbursement, including the three-month moratorium period. Furthermore, funds can be used for a period of 120 days. There will be no moratorium period for paying interest.

10. Rights of NHFDC :

The Managing Director of NHFDC will make final and binding decisions in case of a dispute.

11. Other Terms and Conditions :

Other terms & conditions for the Scheme will be as per the guidelines issued by NHFDC for credit-based funding schemes.

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Harsh Kumar
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