A composite loan scheme designed to finance cottage and village industries through a single, simplified funding structure helps support rural entrepreneurship.
Last updated on: March 30, 2026
The Scheme for Cottage and Village Industries (Composite Loan Scheme) is a Government of India initiative aimed at promoting self-employment and strengthening rural and semi-urban economies. The scheme provides composite financial assistance to individuals and small units engaged in cottage and village industries, covering both working capital and term loan requirements through a single loan structure.
The features and benefits of the scheme are listed below:
Offers a composite loan covering both fixed capital and working capital needs
Designed specifically for cottage and village industry units
Supports new as well as existing enterprises
Encourages self-employment and rural entrepreneurship
Loan assistance is extended through banks and financial institutions
Simplified structure reduces the need for multiple loan applications
Aims to improve income generation and sustainable livelihoods
The eligibility criteria for the scheme are as follows:
Individuals, entrepreneurs, and self-help groups engaged in cottage or village industries
New or existing units involved in manufacturing, processing, or service activities
Projects that fall under the definition of village industries as per Khadi & Village Industries Commission (KVIC) norms
Applicants must meet the credit and KYC requirements of the lending bank
Units should generally be located in rural or semi-urban areas
Listed below are the list of documents needed to apply for the scheme:
| Document Type | Details |
|---|---|
Identity Proof |
Aadhaar card, PAN card, voter ID, or passport |
Address Proof |
Aadhaar card, utility bill, or ration card |
Business Proof |
Project report or business proposal |
Bank Documents |
Bank statements (if applicable) |
Photographs |
Passport-size photographs |
Caste Certificate |
If applicable for concessions |
Other Documents |
As required by the lending bank |
Here are the steps to be followed to apply for the scheme:
Visit the myScheme portal: https://www.myscheme.gov.in
Search for Scheme for Cottage and Village Industries (Composite Loan Scheme)
Review eligibility conditions and scheme details
Prepare the required documents and a basic project report
Apply through a participating bank or financial institution
Track application status via the bank or portal
| Scheme Name | Purpose |
|---|---|
Employment generation through micro-enterprises |
|
Support for micro food processing units |
|
Credit support for SC/ST and women entrepreneurs |
|
Micro credit for small businesses |
|
Cluster-based development of traditional industries |
The Scheme for Cottage and Village Industries (Composite Loan Scheme) plays a vital role in empowering rural entrepreneurs and strengthening grassroots industries. For businesses seeking quicker funding or higher flexibility beyond government schemes, exploring instant business loan options on Bajaj Markets can help meet evolving capital needs efficiently.
Reviewer
Individuals, entrepreneurs, self-help groups, and small units engaged in cottage and village industries can apply, subject to bank eligibility and KVIC guidelines.
Manufacturing, processing, and service activities classified as cottage or village industries, such as handicrafts, food processing, khadi, and rural services, are eligible.
The loan amount depends on the project cost and bank assessment, as the scheme provides composite finance covering both fixed and working capital requirements.
Yes, banks may offer reduced or waived investigation fees for applicants from marginalized communities, including SC/ST, women, and other notified categories, as per applicable norms.