NMDFC - Credit Scheme I

The National Minorities Development & Finance Corporation (NMDFC)

The prime mandate of NMDFC is to provide concessional finance to the Minorities for self employment/ income generation activities. As per the National Commission  for Minorities Act, 1992, the notified Minorities are Muslims, Christians, Sikhs, Buddhists & Parsis. Subsequently, Jain  community was also added into the list of notified Minority Communities in January 2014. Under NMDFC programe, preference is given to Artisans & Women.

At present, the families having annual income up to ₹ 81,000 in Rural areas and ₹ 1,03,000 in urban areas are eligible under the NMDFC schemes. As a special initiative of NMDFC, a new annual family income eligibility limit of up to ₹6.00 lacs has been introduced with effect from September, 2014 by adopting the “Creamy Layer” criterion currently followed amongst the OBC community by Government of India. 

Credit Line – 1

i. Term Loan Scheme

This scheme is for individual beneficiaries and is implemented through the SCAs. Under the Term Loan Scheme, projects costing up to ₹ 20.00 Lakhs are considered for financing. NMDFC provides loan to the extent of 90% of the project cost subject to a maximum of ₹ 18.00 lacs. The remaining cost of project is met by the SCA and the beneficiary. However the beneficiary has to contribute minimum of 5% of the project cost. The rate of interest charged from the beneficiary is 6% p.a. on reducing balance method.

Assistance under Term Loan Scheme is available for any commercially viable and technically feasible venture, which for the purpose of convenience, are classified into the following sectors.

a)Agriculture & allied
b)Technical trades
c)Small business
d)Artisan and traditional occupations, and
e)Transport and services sector

ii. Educational Loan Scheme

This scheme is also for the individual beneficiaries and is implemented through the SCAs. The NMDFC extends educational loans with an objective to facilitate job oriented education for the eligible persons belonging to Minorities. Under this scheme, loan of up to ₹ 15.00 Lakhs is available at the rate ₹ 3.00 lakhs p.a. for ‘technical and professional courses‘ of durations not exceeding five years. Further, for courses abroad, maximum amount of ₹20.00 lakhs is available @ ₹4.00 lakhs per annum for a course duration of maximum 5 years. Funds for this purpose are made available to the SCAs at an interest rate of 1 % p.a. for on-lending to the beneficiaries at 3% interest p.a. The loan is payable in maximum five years after completion of the course. 

 iii. Micro Financing Scheme

Under the Micro Financing Scheme, micro-credit is extended to the members of the Self Help Groups (SHGs), specially the minority women scattered in remote villages and urban slums, who are not able to take advantage of the formal banking credit as well as the NMDFC programmes, through its SCAs. NMDFC is implementing the scheme on the pattern of Grameen Bank of Bangladesh and Rashtriya Mahila Kosh (RMK). The scheme ‘requires that the beneficiaries are organized into Self Help Groups (SHGs) and get into habit of thrift & credit, however small.

The scheme envisages micro-credit to the poorest among the poor through NGOs of proven track-record and their network of Self Help Groups (SHGs). It is an informal loan scheme which ensures quick delivery of loan at the door steps of the beneficiaries. Under this scheme, small loans up to a maximum of ₹ 1.00 lacs per member of SHG are provided through the NGOs / SHGs. The scheme is implemented through the SCAs as well as the NGOs. Funds are given to the NGOs /SCAs at an interest rate of 1%, which further on-lend to the SHGs, at an interest rate not more than 7% p.a. The repayment period under the scheme is maximum of 36 months.

iv. Mahila Samridhi Yojana

It is a unique scheme linking micro-credit with the training to the women members to be formed in to SHGs, in the trades such as tailoring, cutting and embroidery, etc. It is being implemented by NMDFC, through the State Channelising Agencies of NMDFC as well as NGOs. Under the Mahila Samridhi Yojana, training is given to a group of around 20 women in any suitable women friendly craft activity. The group is formed into Self Help Group during the training itself and after the training, micro-credit is provided to the members of the SHG so formed. The maximum duration of the training is of six months with maximum training expenses of ₹ 1,500 p.m. per trainee. During the training a stipend of ₹ 1,000 p.m. is also paid to the trainees. The training cost and stipend is met by NMDFC as grant. After the training, need based micro credit subject to a maximum of ₹ 1.00 lac is made available to each member of SHG, so formed at an interest rate of 7% p.a.