Soft Loan Assistance for Margin Money Scheme
The objective of the scheme is to provide financial assistance to the prospective entrepreneurs who have the requisite talents and traits of entrepreneurship, but lack necessary monetary resources of their own for setting up units/implementing projects under NABARD refinance schemes for non-farm sector, SEMFEX II borrowers and innovative, high tech projects, export oriented units, agro-processing schemes, and agriculture graduates for setting up of Agriclinics and Agribusiness Centres.
The loan assistance towards margin money will be available to the entrepreneurs/promoters comprising individuals, proprietary/partnership concerns, groups of individuals, industrial co-operative societies, government/quasi- government agencies, promotional agencies, development corporations, registered and charitable institutions and voluntary organisations.
Soft Loan Assistance for Margin Money will not be available for SRWTO schemes (with the exception to SEMFEX II borrowers) and Rural Housing.
Mode of Assistance
Margin Money assistance will be by way of soft loans to the entrepreneur/ promoter.
Scope of assistance
Margin money assistance shall be available to the deserving entrepreneurs of all categories covered under this scheme under ARF whether or not the financing bank avails refinance from NABARD, subject to the conditions stipulated in the following paragraphs.
Quantum of Assistance
The quantum of assistance will be determined, among other things, on the basis of the gap between the normal level of borrower's contribution (margin) prescribed by RBI and the borrower's own minimum contribution (stake) for the project to be stipulated by the bank and also the other subsidies/incentives/assistance, if any, provided by the Central/State Government(s)/other Agencies.
The margin requirement will be in conformity with the RBI norms under priority sector and the bank may insist that the entrepreneur brings in the stipulated percentage thereof as his own contribution. The amount of assistance shall be equal to 100% of the shortfall in enterpreneur's/ promoter's contribution i.e. the difference between the margin requirement as per RBI norms and the actual contribution made by the entrepreneur upto 20% of the project cost, subject to a maximum of Rs.5 lakh.
NB: As an exception, under SRWTO scheme, margin money assistance may be extended to SEMFEX II borrowers on a very selective basis, restricting to 10% of the cost of the vehicle.
The delinking of Margin Money assistance from availment of refinance is applicable only under ARF. Higher amount of Margin Money Assistance in excess of Rs 5 lakh per unit, subject to margin money norms as prescribed by RBI could be considered selectively by NABARD, Head Office on a case to case basis, where the project is either 100 % export oriented, innovative, high-tech or agro-processing and benefitting a large number of small producers. The assistance will, however, be available under pre-sanction procedure and only when the financing bank avails refinance from NABARD against the term loan.
Terms & Conditions
Extent of refinance :
Refinance assistance to the financing banks will be provided to the extent of 100% of the margin money loan.
Rate of interest /service charge:
The refinance assistance provided against the loan for margin money will be, for the present, free of interest. However, the financing bank will be allowed to levy a service charge upto a maximum of 5% p.a (except for Agri-Clinic/Agri-Business where it is 2% p.a) simple rate at the discretion of the bank, on the outstanding amount of margin money loan. In the case of borrowers of SEMFEX-II, the banks may waive the service charge at their discretion.
Repayment period :
Margin Money loan will be recovered along with the term loan in suitable instalments.
Drawal of Refinance
a) In case the financing bank avails refinance on the relative term loan sanctioned to the entrepreneur, the banks may sanction and release the soft loan assistance and claim refinance from NABARD, furnishing separate drawal applications for refinance for term loan and margin money assistance.
b) Banks may also draw refinance towards margin money assistance without availing refinance against the term loan. In such cases, they may use the same format and approach NABARD, Regional Office after sanction of the assistance at their end.
c) In case of proposals covered under pre-sanction procedure, banks may submit proposals for both refinance for term loan and soft loan assistance simultaneously to NABARD Regional Offices. Refinance may be drawn in the usual manner, once the proposal is sanctioned by NABARD.