The NSIC under the MSME Credit Facilitation Scheme has entered into a Memorandum of Understanding with several Nationalized and Private Sector Banks for credit support to MSMEs from banks without any cost to MSMEs.
Moreover, the MSMEs can upgrade their competence in terms of business and technologies by getting rated through independent, renowned and professional rating agencies that are empanelled with NSIC. These empanelled rating agencies include CRISIL, ONICRA, SMERA-D and B, CARE, India Ratings, BRICKWORK and ICRA. The MSE’s that are rated under the NSIC-Performance and Credit Rating Scheme not only has the liberty to get ratings from the above-mentioned agencies of its choice but it also invariably elevates their creditability in business and helps them in obtaining their appropriate credit from the banks at the liberal rates of interest. All documents required in the completion and submission of a credit proposal to the bank is undertaken by NSIC, therefore saves cost and time to the MSMEs.
What is Bank Credit Facilitation Scheme?
It is essentially an agreement or a memorandum of understanding between two parties – the National Small Industries Corporation (NSIC) and several private and national banks in India.
Such an agreement is drawn to help small and medium enterprises meet their credit requirements and access business loans from both private and national banks. Under this scheme, MSMEs can receive required assistance with a loan application, documentation, and other formalities.
Note that every registered and government-recognised business, be it a small, medium or micro enterprise, is eligible for this facilitation scheme. However, they must have a KYC compliant account to avail a loan under this scheme.
Benefits of Bank Credit Facilitation
The Bank Credit Facilitation Scheme offers the following salient benefits:
- Easily available credit for MSMEs
- Ensuring assistance to MSMEs for filing and documentation for loan schemes
- Assisting MSMEs to get good interest rates
- Helping MSMEs to get financed from banks
- Facilitating credit availability for all kinds of MSMEs
Bank Credit Facilitation Objectives
Following are the objectives of the scheme
- This scheme facilitates loans to various MSMEs with the help of different private and public sector banks.
- It also provides an option to various MSME units to transfer their existing bank account or create a new one in a different bank.
- The bank credit scheme provides aid to MSMEs by helping them in filling their loan application & preparing required documents and the submission of the same to banks.
- This scheme provides help to MSMEs in getting competitive interest rates from banks on getting a loan favourable rating which is awarded to these units by the Performance and Credit rating from the Ministry.
- It is created so that more number of MSMEs is able to avail benefit from such schemes & to help in the growth of them.
Eligibility Criteria to apply for Bank Credit facility
All registered businesses are eligible for a Bank Credit Facilitation Scheme, whether the business is a micro, small, or even medium one. As long as the enterprise ID is registered and recognized by the Government, it can apply for a Bank Credit Facilitation Scheme.
Features of Credit Facilitation Scheme
The major highlights of the scheme are given below:
- Facilitates credit to the MSMEs by having an integrated mix of various public and private sector banks.
- It provides an option for MSMEs to apply for a new bank or switchover of an account to a different bank.
- It assists the MSMEs to complete documentation and in submitting it to the bank.
- It helps the MSMEs in getting a liberal rate of interests from the banks after a favourable rating is offered to units that are under the Performance and Credit rating scheme of the Ministry.
- Under the Credit Facilitation Scheme, MSMEs can get access to finance from the banks that are based upon their leading policy and focussed attention is given to the credit proposals that are sponsored by NSIC.
- To facilitate a high number of MSMEs who are desirous in availing the credit.
- To provide handholding support to MSMEs
Types of Loans under Bank Credit Facilitation Scheme
You can apply for any of these business loans under this scheme
1. Working Capital Limit
The loans under this category can take the form of overdraft facility against book debt, bill discounting services, and open cash credits.
2. Non-Fund-Based Limit
This type of loan category includes guarantees like foreign bank guarantees, letter of credits, and credit letter. To benefit from this credit facility, entities need to open a credit account that allows account holders to withdraw cash within a pre-set credit limit.
3. Term Loans
You can apply for long-term, mid-term, or short-term loans based on your requirement and repayment capability. Generally, enterprises apply for this loan to purchase equipment or meet other large-scale expenses essential to set up an enterprise or its expansion.
Documents Required for Bank Credit Facilitation Scheme
The documents that have to be submitted differs depending on the purpose of the loan. The general reports are
- Identity Proof
- Residential Proof
- Business address proof
- Asset and Liability Statement of promoters, directors, guarantors etc. with the recent income tax returns.
- Rent agreement/ lease added if business premises rented/ leased.
- Copy of SSI registration certificate/ entrepreneur’s Memorandum.
- Profile of the unit includes the name and address of promoters, experience, nature of the activity, the address of all the offices/ plants, shareholding pattern, etc.
- Balance Sheet with IT/ ST returns of the past three years.
- The projected balance Sheet for the next two years.
- Application duly filled in the prescribed format.
- CMA data in the prescribed format.
- The position of accounts with the existing bankers.
- Project report for term loan requirements.
- Estimates/ quotations/ sanctioned building plan etc.
- Partnership Deed/ Trust Deed/ Rules and Bye-laws/ Memorandum and Articles of Association/ Certificate of Incorporation etc.
- Clearance from Pollution Control Board/ Sanction from the Electricity Board and other statutory authorities.
- The month-wise production and sales data for the current financial year, the value of stock in process, finished goods, debtors, creditors etc.
Steps To Apply For Bank Credit Facilitation Scheme
You can apply for this bank credit facility by following these steps
Step 1 – Go to the NSIC’s official website
Step 2 – Look for the application form
Step 3 – Download and print the form
Step 4 – Provide essential details to fill up the form
Step 5 – Submit the duly filled form along with all the essential documents
Type of Enterprise According to which Loan Amount Varies
Micro enterprises are those manufacturing units in which the total actual value of machinery & plant is up to Rs 25 lakhs.
It is a service enterprise whose original investment value of the equipment is up to a maximum of Rs. 10 lakhs.
Small Enterprises are those manufacturing units in which the total actual value of machinery & plant is above Rs 25 lakhs but below Rs 500 lakhs.
It is a service enterprise whose original investment value of the equipment is up to a maximum of Rs. 200 lakhs but above Rs 10 lakhs.
Medium Enterprises are those manufacturing units in which the total actual value of machinery & plant is above Rs 500 lakhs but below Rs 1000 lakhs.
It is a service enterprise whose original investment value of the equipment is up to a maximum of Rs. 500 lakhs but above Rs 200 lakhs.