Lending policy of National Handicapped Finance Corporation

Source – Ministry of Social Justice and Empowerment, Government of India

LENDING POLICY OF NATIONAL HANDICAPPED FINANCE AND DEVELOPMENT CORPORATION

1. Implementing Agency –

National Handicapped Finance and Development Corporation (NHFDC) was set up by the Ministry of Social Justice & Empowerment, Government of India in January 1997. The company is registered under section 25 of the Companies Act, 1956 as a company not for profit. It is wholly owned by Government of India and has an authorised capital of Rs. 400 crore. The company is managed by Board of Directors nominated by Government of India.

NHFDC function as an apex institution for channelising the fund to the persons with disabilities through the State Channelising Agencies (SCAs) nominated by the State Government(s) or through Non Government Organisations (under Micro Financing Scheme).

2. Objectives –

a) Promote economic development activities and self-employment ventures for the benefit of persons with disability.

b) Extend loan to the persons with disability for upgradation of their entrepreneural skill for proper and efficient management of self-employment ventures.

c) Extend loan to persons with disability for pursuing professional/technical education leading to vocational rehabilitation/self-employment.

d) To assist self-employed individual with disability in marketing their furnished goods.

3. Scope –

Scope of this lending policy is limited to –

i) Financing income generating activities for the persons with 40% or more disability through the SCAs.

ii) To provide micro credit finance to the target group through Non Government Organisations (NGOs).

iii) To Provide grant to the SCAs for entrepreneural and skill development programme. iv) To provide grant to the SCA for computerisation of the activity of NHFDC.

4. Eligibility Criteria –

Any disabled person who fulfills the following criteria is eligible to apply for financial assistance –

a) Any Indian Citizen with 40% or more disability.

b) Age between 18 and 55 years.

c) Annual income below Rs. 1,00,000/- for urban areas and Rs. 80,000/- p.a for rural areas.

d) Relevant educational / technical / vocational qualification/ experience and background.

5. Rate of Interest –

	To be Paid by SCAs	To Be Paid by Beneficiaries to SCAs
i) Upto Rs. 50,000/-	2%	5%
ii) Above Rs. 50,000 and upto Rs. 5.0 lakh	3%	6%
iii) Above Rs. 5.0 lakh	5%	8%

6. Rebate –

A rebate of 1% on interest is given to women with disabilities.

7. Schemes of NHFDC –

The corporation can assist a wide range of income generating activities for disabled persons. These are –

a) For setting up small business in Service/Trading sector : Loan up to Rs. 1.0 lakh for sales trading activity and Rs. 3.0 lakh for service sector activity

– Loan assistance provided for self-employment of disabled persons in service sector or for trading activity. The small business, project or activity, for which financial assistance has been sought, will have to be operated by the disabled person himself and employing at least 15% disabled persons in his venture.

b) For agricultural Activities : Loan upto Rs. 5.0 lakh.

Loan assistance is provided to disabled persons for agricultural production, irrigation, horticulture, sericulture, purchase of agricultural machinery/equipment for agricultural service, marketing of agriculture products etc.

c) For purchase of vehicle for commercial hiring – Loan upto Rs. 5.0 lakh

– Purchase of vehicle including auto rikshaw for commercial hiring purpose

d) For self-employment amongst persons with mental Retardation, Cerebral Palsy and Autism : Loan upto Rs. 3.0 lakh.

– Persons with mental retardation, cerebral palsy or autism may not be eligible to seek loan and enter into a legal contract. In such cases following categories of persons are eligible for financial assistance from NHFDC on behalf of mentally retarded persons –

i) Parents of dependant mentally disabled person

ii) Spouse of dependant mentally disabled person

e) For setting up small industries unit : Loan upto Rs. 5.0 lakh.

– Loan assistance is provided to disabled persons for manufacturing, fabrication and production. The disabled person will be the owner/chief executive of the company and will employ at least 15% disabled persons.

f) For technical education/training – Loan limit as per requirement.

– Criteria and norms for sanction of educational loan will be the same as followed by State Bank of India.

g) Micro Financing Scheme –

The Micro Financing Scheme is presently implemented by NGO working in the social sector preferably for the disabled persons and should have adequate experience for undertaking programmes for economic and social rehabilitation of economically weaker section of the society.

i) Quantum of loan to NGO is Rs. 5.0 lakh (Rupees Five Lakh only) and NGO can further disburse the loan upto Rs. 15,000/- (Rupees Fifteen Thousand only) to each disabled beneficiary.

ii) An interest rate of 2% is charged from the NGO and NGO can further charge upto 5% interest from the beneficiary.

iii) Repayment period is 24 months.

iv) Beneficiaries must fulfil the eligibility criteria as prescribed for beneficiaries under other schemes.

v) A grant of Rs. 10,000/- (Rupees Ten Thousand only) is given to the NGOs for promoting, implementing and launching Micro Financing Scheme.

vi) Under the scheme, the application by NGO is to be forwarded to NHFDC directly.

h) Scheme for Parents Association for the Mentally Retarded Persons – Loan upto Rs. 5.0 lakh

– Financial assistance is provided to Parents Association for the Mentally Retarded Persons to set up an income generating activity for the benefit of mentally retarded persons. The nature of income generating activity will be such that it involves the mentally retarded persons directly and income will be contributed among the mentally retarded persons.

i) Under the scheme, the application by the association is to be forwarded to NHFDC directly.

ii) Quantum of loan, rate of interest, repayment period etc. will remain same as for schemes implemented through the SCA.

i) Assistance for Skills and Entrepreneurial Development Programmes

– Financial assistance in the form of loan is provided to the channelising agencies for imparting skills and entrepreneurial development training to disabled persons.

8. Procedure of Sanction and Disbursement –

i) The power to sanction loan to the beneficiary is delegated to SCA upto a project cost of Rs. 1.0 lakh

ii) Beneficiaries would submit the loan applications in the prescribed format to SCA.

iii) The SCA would scrutinise and sanction loan in accordance with the guidelines for sanction of loan. Broadly, the guideline for sanction provide that the SCA should constitute a project approval committee chaired by the MD of the SCA. It should preferably have a specialist from disability sector and one reputed NGO working in disability sector.

iv) The SCA would ensure that the applicants, who are sanctioned loan, fulfil the eligibility criteria as per the guidelines for funding.

v) The SCA would issue sanction order, which will contain the name of beneficiary, name of income generating activity, the amount of loan sanctioned and the main terms and conditions of the sanction. The terms and conditions of sanction would be the same as contained in the sanction letter presently being issued by NHFDC.

vi) After the sanction, the SCA would communicate the sanction to NHFDC along with particulars of the beneficiaries for incorporation in the beneficiary-database of NHFDC.

vii) The SCA would raise a demand to NHFDC for release of fund for further disbursement to beneficiaries.

viii) The fund would be released by NHFDC to SCAs after considering the status of government guarantee/suitable security, General Loan Agreement, sanction order, recovery & utilisation, beneficiary data etc.

9. Utilisation of loan –

The fund released by NHFDC is to be utilised by the SCA within 90 days from the date of issue of demand draft. 7 days grace period is allowed towards transition period of demand draft. During this prriod of 90 days, an interest of 2% per annum would be charged. However, applicable interest rate would be charged from the date of disbursement of loan to the beneficiary. In case, the loan amount is not utilised within 90 days, the undisbursed amount is to be returned to NHFDC immediately.

10. Share of SCAs –

The SCA is expected to contribute 5% for project above Rs. 50,000/- as their share of the project.

11. Promoter’s Contribution –

i) Upto Rs. 1.0 lakh – Nil

ii) Above Rs. 1.0 lakh and – 5% upto Rs. 5.0 lakh

12. NHFDC share of the Project cost –

i) Upto Rs. 50,000/- – 100%

ii) Above Rs. 50,000/- and – 95%upto Rs. 1.0 lakh

iii) Above Rs. 1.0 lakh and – 90% upto Rs. 5.0 lakh

13. Moratorium Period –

A moratorium of three months will be available to the SCAs in repayment of principal after the expiry of utilisation period. The SCAs are expected to provide the similar moratorium to the beneficiaries. The longer moratorium period may be considered in specific cases depending upon the nature of the project.

14. Repayment Period –

The loan is required to be repaid in quarterly instalments over a period of 10 years after the expiry of moratorium period.

15. Security

The funds are provided to the Channelising Agencies nominated by respective State Governments against the State Government Guarantee. In exceptional circumstances, NHFDC may consider financing the Channelising Agencies nominated by it (NHFDC) on the guarantee of the said agency with the approval of the Board. In case of persistent defalt, the NHFDC will be at liberty to invoke the guarantee or deduct its instalments from the future projects of the concerned agency to be financed. NHFDC may also accept Bank Guarantee or any other form of security acceptable to it for grant of loans.

16. Liquidated Damages on Defaulted Payments

Defaults in the repayment of NHFDC dues (principal as well as interest) shall attract liquidated damages @ 2% p.a. over and above the normal rates of interest.

17. Penal Interest

In case the loan is not disbursed to the beneficiary by the SCA within 90 days of receiving the fund from NHFDC, the interest on un-utilised amount will be @ 3% p.a. over and above the normal rate of interest on term loan for next 90 days. Thereafter, the un-disbursed amount will be refunded by SCA to NHFDC and additional penal interest of 2% will be charged till the date of refund.