As per the MUDRA annual report of FY 2018-19, around Rs. 30,000 crores was disbursed to those belonging to minority groups in that year. Minority accounts stood close to 6 million as compared to those falling under the general category which were 5 times higher at around 31 million. The Pradhan Mantri MUDRA scheme launched in 2015 is a refinancing scheme that provides loans as low as Rs. 50,000 upto Rs. 10 Lakhs to support micro businesses and those who are self-employed.
Individuals in the general category received the majority of loan amount disbursed at 68%, followed by women at 44%, and those borrowing for the time at 33%. Scheduled caste and scheduled tribe individuals received 12% of the loans sanctioned during FY 2018-19.(1) Private banks and non-banking finance companies outscored public sector financial institutions when it came to lending.
The figures above are indicative of how getting a business loan can be a struggle for those who belong to a minority community, especially in the challenging economic scenario prevailing today. Small business owners have been the worst affected by the countrywide lockdown this year in the wake of the pandemic forcing them to shut their shops.
Projections of a negative GDP growth in 2020-21 by economists has further dampened the entrepreneurial spirit with little or no hope of recovering lost business. However, if you are a small business owner who is a part of a minority group, there are relief options available specially for you. This is because you can avail small business loans for minorities at discounted rates and support your enterprise in such tough times.
The National Minorities Development and Finance Corporation (NMDFC) was founded in 1994 with a mission to provide financial support to those who fall in the backward category within minorities and want to build a business. NMDFC is a joint venture that is supported by the state governments and union territories along with the Government of India. Religious minorities are the target group of NMDFC and qualify for a minority business loan,apart from women and other occupational groups as well. Sikhs, Christians, Parsis, Muslims, Buddhists and Jains are classified as religious minorities as per the National Minorities Commission Act 1992.
Concession in loan disbursement is not decided by your minority status alone. The annual income of the family is also assessed before making the decision to give out the loan. Each state and Union Territory in India has a definite share of credit to be given in proportion to its population. A network of NGOs or self-help groups as well as state channelizing agencies help NMDFC reach out to the needy beneficiaries. By the end of 2019, the paid-up share capital of NMDFC stood at Rs. 2077. 51 crores out of which Rs. 1700 crores was contributed by the Government and the remaining by the states and union territories.
NMDFC provides financial assistance in the form of small business loans for minorities through two lines of credit as detailed below:
There are various lending schemes offered by the NMDFC such as:
A minority business loan is given on individual basis through State Channelising Agencies or SCAs under this scheme. Rate of interest to be paid by beneficiaries varies for men and women. A maximum of Rs. 30 Lakhs can be availed to finance your business for those falling under Credit Line 2, while minorities classified as per Credit Line 1 can get upto Rs. 20 Lakhs. Rate of interest to be paid by beneficiaries is a flat 6% under Credit Line 1 for both men and women whereas men need to pay a higher 8% interest if they avail credit in the Credit line 2 category. A 6 month moratorium period and 5 years of repayment tenure is available to all beneficiaries. SCAs are allowed to repay within 8 years at a rate of interest of 3% under both lines of credit. The reality of the minority family on ground is advised to be the basis for doling out financial support and thereby sanctioning of the loan by the SCA.
Artisans who want to purchase tools or machinery to carry their business and are in need of either working or fixed capital can easily avail up to Rs. 10 Lakhs as small business loans for minorities provided under this scheme. While men need to pay 5% interest, women are given a discount of 1% and need to pay only 4% interest per annum. A moratorium period of 6 months and repayment of upto 5 years applies. SCA’s are provided an 8 year repayment tenure with an interest rate of 3% for men and 2% for women.
This scheme has particularly benefited women in far flung remote areas who neither have access to avail basic banking facilities or SCAs. Despite their hardships, they still want to be financially independent. Micro credit is extended to such women through the network of self-help groups(SHGs) spread in villages and slums in cities to provide informal economic support and enable doorstep delivery of credit. A maximum of Rs. 20 Lakhs can be availed by a group of 20 women in an SHG under credit line 1 and Rs. 30 Lakhs for those falling under Credit Line 2 with a flat interest rate of 7% for all in the former and 10% for men and 8% for women in the latter. Repayment tenure stands at 3 years for both. NMDFC charges a flat rate of interest from SCAs or NGOs which in turn levy interest on SHGs as applicable for both lines of credit.
Apart from the schemes mentioned above, there are several promotional schemes from the NMDFC as well. These help minority communities to become self-reliant and financially independent by providing them training or helping them develop a skill in order to start a new business. Some of them include Kaushal se Kushalta scheme and Mahila Samridhi Yojana to name a few. You can browse through these on the website of the Ministry of Minority affairs and fill the relevant application forms online.
Alternatively, banks and financial institutions also extend loans to help you upgrade your business or even start a new one. For instance, you can apply for Bajaj Finserv Business Loan of up to Rs. 30 Lakhs available on Finserv MARKETS without any collateral. Apart from the huge loan amount, no guarantor is required, and the loan is approved within minutes. You also get complete repayment flexibility from 12 months to 5 years as per your financial comfort.
Not only this Bajaj Finserv Business Loan available on Finserv MARKETS can be customised as per your requirements and even comes with value added services such as Financial Health Check Report(FHCR) and insurance plans to provide maximum support to your enterprise from future risks. The entire application process is completely online so that you can apply from the comfort of your home.
Just fill your personal details along with company information online and indicate the amount of loan required along with the repayment duration. Your loan will be approved within 3 minutes and disbursed within 24 hours. Not only this, you can also utilise the business loan EMI calculator to know the monthly EMIs of your Bajaj Finserv Business Loan available on Finserv MARKETS even before you apply. So what are you waiting for? Realise your business dreams today!