Credit-Based Schemes For SC – Aajeevika Microfinance Yojana (Livelihood Microfinance Scheme)

The scheme empowers rural entrepreneurs, particularly women, by providing micro-financing options for their small-scale business activities, fostering rural development.

Overview of Aajeevika Microfinance Yojana 

The Ministry of Social Justice and Empowerment has a special micro-finance scheme for people who belong to the Scheduled Caste category. This scheme is like a helpful hand for those who want to start or grow their own small or micro-business.

Objective

The Aajeevika Microfinance Yojana, initiated by the Ministry of Social Justice and Empowerment, aims to empower Scheduled Caste entrepreneurs through a credit-based scheme. This program involves various entities, including Microfinance Institutions (MFIs), Non-Banking Financial Companies (NBFCs), and individuals engaged in microfinance and business activities. 

The primary goal is to provide financial support at reasonable rates of interest, facilitating poverty alleviation and fostering economic empowerment among Scheduled Caste communities.

The central objectives of the Aajeevika Microfinance Yojana are as follows: 

• Setting up of organizations dedicated to providing financial services, including credit, to individuals and small businesses in underserved communities.
• Setting up of Financial institutions that offer banking services without holding a full banking license, for expanding financial inclusion.
• Providing assistance to economic endeavours and entrepreneurial ventures undertaken by individuals, particularly those belonging to Scheduled Caste communities.
• Providing financial services, such as small loans and savings accounts, tailored to meet the specific needs of individuals in low-income or marginalized communities.

Eligibility

To qualify for the Aajeevika Microfinance Yojana, individuals need to fulfil certain criteria. The eligibility requirements include:

Age Limit:

Individuals may have to attain the age of 18 years to be eligible to apply. The scheme may have age restrictions to ensure targeted assistance to a particular demographic.

Residence Proof:

Applicants must provide valid documents establishing their place of residence. This could include utility bills, government-issued identification with an address, or other relevant documents.

Income Requirements:

The scheme may set specific income criteria to determine eligibility. This ensures that assistance is directed towards those with limited financial means.

3 Years Profit Track Record:

Individuals or businesses seeking support under the scheme may need to demonstrate a profitable track record over the past three years. This requirement showcases financial stability and sustainability.

Gross Non-Performing:

The gross non-performing assets (NPAs) of the applicant are likely considered. This metric assesses the financial health of the individual or business by examining the percentage of loans that are not being repaid.

Benefits

The Aajeevika Microfinance Yojana offers a range of advantages to individuals engaged in income-generating activities. Here are the key benefits:

Financial Assistance:

Receive financial support up to 90% of the project cost, with a maximum limit of Rs. 1,40,000.

Interest Rates:

Enjoy competitive interest rates set at 11%, with a reduced rate of 10% for women borrowers along with a moratorium period, 

Interest Subvention:

Avail interest subvention at a rate of 2% per annum from the National Scheduled Castes Finance and Development Corporation (NSFDC) upon the timely and full repayment of dues on a yearly basis for individual borrowers.

Repayment Period:

Benefit from a reasonable repayment period of within 3 and ½ years. Repayments are structured in quarterly instalments starting from the date of each disbursement, including the moratorium period.

Opportunity for Further Loans:

After successfully repaying an earlier loan, eligible beneficiaries have the opportunity to access additional loans under NSFDC schemes. These loans can be obtained from Non-Banking Financial Companies-Microfinance Institutions (NBFC-MFIs) or other channelizing agencies associated with NSFDC.

Unit Cost 

Quantum of Assistance

The NSFDC’s portion of the project’s cost could reach 90%. The NBFC-MFI and/or beneficiaries must contribute the remaining part.

Interest Subvention

For people who borrow money as individuals, there’s a special bonus. If you pay back your loan on time, NSFDC will give you a little money back. This is how it works:

• NSFDC will reduce your interest by 2% each year if you pay back all your dues on time, for the whole year.
• This money will be sent directly to your bank account by NSFDC, kind of like getting a small gift in your account.

But first, the company that gave you the loan (NBFC-MFIs) has to tell NSFDC that you really did pay back on time. 

Rate of Interest

Second Loan 

After an initial loan has been repaid, qualified borrowers may apply for additional loans under NSFDC programs from NBFC-MFIs or other channelizing organizations.

What Kind of Assistance is Provided Through NSFDC?

The National Scheduled Castes Finance and Development Corporation (NSFDC) provides assistance in multiple areas, one of which is Skill Training & Development. Here’s a breakdown of what it entails:

Skill Training & Development:

NSFDC offers various programs for skill development and training to individuals from Scheduled Castes. This is aimed at improving their employability and helping them secure better job opportunities. The training may include vocational skills, technical skills, or soft skills. Sometimes, financial assistance or scholarships can be offered to help individuals complete their training programs.

In addition to Skill Training & Development, NSFDC also provides other forms of assistance, such as:

Micro Financing: This involves providing small loans to individuals or groups to start or expand small businesses. These loans are usually given at lower interest rates.

Education Loans: NSFDC provides loans to Scheduled Caste students who want to pursue higher education. These loans help cover tuition fees, books, and other educational expenses.

Green Business Scheme: This scheme supports environmentally sustainable businesses. It provides financial assistance to entrepreneurs from the Scheduled Castes who are engaged in green businesses or want to start a business that is environmentally friendly.

Entrepreneurship Development Programmes: NSFDC conducts programs that help individuals develop skills to start and manage their own businesses.

Marketing Support: NSFDC assists individuals in marketing their products or services. This includes helping them find markets and buyers, and teaching them how to promote their businesses.

Renewable Energy Projects: Financial assistance is also provided for setting up projects that use renewable energy sources.

Benefits of Aajeevika Microfinance Yojana

Financial Help:

• You can get financial help covering up to 90% of your project cost, but not more than ₹1,40,000.
• This money should be used for small businesses that will help you earn an income.
• You have to pay interest. Normally it’s 11%, but for women, it’s a little less at 10%.

Paying Back the Loan:

• You have 3 and a half years to pay back the whole loan.
• You make payments every three months (that’s four times a year).
• There’s something called a moratorium period of 3 months, which is like a break at the start where you don’t have to pay anything yet.

Extra Bonus:

• If you are really good at paying back on time, NSFDC will give you a 2% discount on the interest rate every year.
• This discount will be sent straight to your bank account.

Documents Required for Aajeevika Microfinance Yojana

The mandatory documents required are Aadhaar Card, Income certificate, Caste certificate, and Bank account statement. Other documents to be carried are:

Passport Size Photographs:

• Usually required for identification purposes.

Proof of Address: 

• Such as utility bills (electricity, water), or Voter ID cards, to verify your residential address.

Business Plan or Project Report: 

• If you’re applying for a business loan, you might need to present a detailed business plan or project report.

Educational Certificates: 

• Sometimes educational qualifications need to be verified.

Quotation of Machinery/Items to be purchased:

•  If the loan is for buying machinery or any items for the business.

Proof of Identity: 

• Besides Aadhaar, other ID proofs such as PAN Card or Driving License can be required.

Bank Passbook: 

• In some cases, in addition to the bank account statement, the passbook might also be required.

Previous Loan Statements: 

• If applicable, statements of any previous loans.

Registration Certificates:

•  If you are applying for a business loan, you might need business registration or license certificates.

FAQs for Aajeevika Microfinance Yojana

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