| Source – National Handicapped Finance and Development Corporation |
| Guidelines for Financing Micro Financing Scheme Implemented through State Channelising Agencies (SCAs) – Introduction – National Handicapped Finance and Development Corporation (NHFDC) has been set up to promote economic and development activities undertaken by persons with disability. The Corporation assists them by providing loans for self employment and other economic ventures. The majority of disabled population is constantly in need of small loans for sustaining its existing employment, for generation of further employment as also for meeting varied personal and social needs.The poorest among the poor need loans of vary small amount but their requirement is quick delivery of loan at their doorsteps. Traditionally, private money lenders have been playing this role but their intention has been to exploit the poor instead of helping them and this rather worsened the plight of the poor. Over a period of time, the significance of provision of credit as an instrument of socio-economic change and development is being realised and many international and national organisations including the nationalised banks have come up to provide soft loans to the poor in order to free them from the clutches of private money lenders. However, the task is gigantic and a wide gap persists in meeting the credit needs of the poor. With this in mind, the NHFDC has decided to implement the scheme of Micro-Financing as per details given in the following paras. MAIN FEATURES OF THE SCHEME — Purpose of Loan – Purpose of the loan is to provide financial assistance to weaker section of the disabled for starting or augmenting income generating activities. The illustrative nature of income generating activities are given below : i) Small business/trade ii) Tiny/cottage industry or service activity iii) Artisan activities iv) Agricultural and allied activities v) Transport sector activities Quantum of Loan and Rate of Interest – Under the scheme of Micro Financing, loan is given to the SCAs for further disbursement to individual beneficiaries, self-help groups of disabled persons and Non Government Organisations. Maximum amount of loan is Rs. 5,00,000/- (Rupees Five Lakh only) per beneficiary @ interest not exceeding 5% per annum on convenient terms. Loans could also be given repeatedly, if necessary, subject to repayment of earlier loans. Interest Spread – The leading rate of NHFDC for implementing agencies i.e. SCAs is 2% per annum. The SCAs will charge from ultimate borrower rate of interest not exceeding 5% per annum. Thus, interest spread of 3% will be available to the SCAs to meet their administrative and implementation cost. In case, the loan is provided to ultimate borrowers through SHGs/NGOs, the interest spread of 3% may be divided between SCAs and SHGs/NGOs, as per their mutual agreement. Eligibility Criteria or Beneficiary – a) Any Indian Citizen with 40% or more disability b) Annual income below Rs. 1,00,000/- for urban areas and Rs. 80,000/- for rural areas. c) Age between 18 and 55 years. d) The borrowers already covered under any other scheme of financing sponsored by Central Government or financing institutions and having outstanding loans against their names shall not be eligible. e) The borrowers should preferably be regular member of Thrift and Credit Group (Self Help Group). f) Preference will be given to women beneficiaries. g) Relevant educational/technical/vocational qualification, experience and background. Implementing Agency – a) NHFDC will provide credit to persons with disability through SCAs in Rural and Urban areas. b) The SCAs will further finance the beneficiaries either directly or theough NGOs/SHGs. c) The sanction of the loan will generally be based on initial requirement / action plan submitted by the SCAs in the beginning of the finacial year. d) The maximum number of member in SHGs will not exceed 20. e) A member in the SHG should not have any outstanding loan from any other SHGs. f) No separate implementation grant will be paid to the SCAs under Micro Financing Scheme. g) The SCAs will disburse the amount to NGOs/SHGs/individuals with in 90 days from the date of release of fund the NHFDC. h) Funds under MFS will be disbursed only to those SCAs who have executed the General Loan Agreemnet and provided adequate Government guarantee. i) Further disbursement will be done to the SCAs after receiving the utilisation of the loan. Financing Patterns – NHFDC would provide 100% of the project cost to the SCAs for disbursement to the NGOs / SHGs / Individuals. Utilisation of Loan and Refund of Unutilised Loan – i) The SCAs to which funds have been sanctioned can make the drawal of funds as per requirement with in the credit limit sanctioned, which generally will be for one year. ii) The first drawal will be made not later than one month from the date of sanction unless the limit is extended by the NHFDC. If the lending operation are not so commenced, the NHFDC will be at liberty to cancel the sanction or vary any of the terms and conditions. iii)The funds made available to an SCA are to be utilised within a period of 90 days from the date of release of funds. The SCAs will be required to submit the utilisation of funds in the prescribed format. The funds remaining unutilised due to any reason, will be required to be refunded within a fortnight on expiry of utilisation period indicated in the sanction letter. Repayment – Term loans drawn from NHFDC will be required to be repaid within a period of 36 months in quarterly instalments. The instalments of term loan and interest shall be repayable to NHFDC on 30th June, 30th September, 31st December and 31st March every year or on such other dates as agreed to by NHFDC. Six days grace period will be admissible for payment of any instalment to NHFDC. Penal interest of 2% will be levied on delayed payments upto one month. Books of Accounts/Inspections – The SCAs shall maintain separate accounts in respect of the funds provided by NHFDC. The SCAs should also inspect the beneficiaries of the NHFDC under Micro Finance Scheme and submit the quarterly progress report. Any other information will also to be submitted as and when requested. Procedure for obtaining Loan – The SCAs desirous of implementing the Micro Financing Scheme (MFS) to further provide loan to individuals, Self Help Groups and Non Government Organisations will submit an application in the prescribed format. Particulars of eligible borrowers will also be required to be submitted alongwith the application. Based on the information given in application and credential verification report on the SHG/NGO, NHFDC will sanction the loan amount. The report will include the recommendations regarding suitability of the NGO/SHG for implementation of Micro Financing Scheme and its capacity to handle number of beneficiaries vis-a-vis the amount of funds. The sanction letter will be issued to the SCAs giving details of terms and conditions of the financial assistance including utilisation period, recoveries, penal interest etc. |