NULM, NRLM and MRSETIs

Purpose

The Self Employment Program (SEP) of NULM focuses on providing financial assistance through provision of interest subsidy on loans to support establishment of Individual & Group Enterprises and Self-Help Groups (SHGs) of urban poor. The erstwhile provision of capital subsidy for USEP (Urban Self Employment Program) and UWSP (Urban Women Self-Help Program) under SJSRY has been replaced by interest subsidy for loans to Individual enterprise (SEP-I), Group enterprise (SEP-G) and Self Help Groups (SEP- SHGs). With a view to improving the livelihood opportunities for the poor in urban areas, Ministry of Housing and Urban Affairs (MoHUA), Government of India, has modified the scheme guidelines of Deendayal Antyodaya Yojana- National Urban Livelihood Mission (DAY-NULM). Updated guidelines as per RBI notification RBI/2021-22/12/ FIDD.GSSD.CO.BC.No.03/09.16.03/2021-22 dated 05.04.2021

Features

Loan Amount / Tenure of loan:

• Individual Enterprises (SEP-I)-Loan & Subsidy:
  An urban poor individual beneficiary desirous of setting up an individual microenterprise for self-employment can avail benefit of subsidized loan under this component from any bank. The norms/ specifications for individual micro-enterprise loans are as follows:
• Age: The prospective beneficiary should have attained the age of 18 Years at the time of applying for loan
• Project Cost (PC):
  The Maximum unit Project Cost for an individual microenterprise is ₹ 2,00,000 (₹ Two Lakhs).
• Margin Money:
  No margin money should be taken for a loan up to ₹ 50,000 and for higher amount loans, preferably 5% should be taken as margin money and it should in no case be more than 10% of the project cost
• Group Enterprises (SEP-G) Loan & Subsidy:
  A Self Help Group (SHG) or members of an SHG constituted under DAY-NULM or a group of urban poor for self-employment can avail benefit of subsidized loans under this component from any bank. The norms/ specifications for group based micro-enterprise loans are as follows:
• Eligibility Criteria: The group enterprises should have minimum of Three (3) members with a minimum of 70% of the members from urban poor families. More than one person from the same family should not be included in the same group.
• Age: All members of the group enterprise should have attained an age of 18 years at the time of applying for bank loan.
• Project Cost (PC): The group will be eligible for a maximum loan of Rs. 2 Lakh per member or Rs. 10 Lakh, whichever is lower.
• Loan and Margin Money: The Project Cost minus the beneficiary contribution (Margin Money) would be made available as loan amount to the group enterprise by the bank. No margin money should be taken for loan up to ₹ 50,000 and for higher amount loans, preferably 5% should be taken as margin money and it should in no case be more than 10% of the project cost.
• Rate of interest : As applicable to MSME finance under relevant amount be charged.
• Type of Loan : Cash Credit / Term Loan
• Repayment schedule would range between 5 to 7 Years after initial moratorium of 6-18 months as per norms of the banks.

Collateral Security

No collateral is required in the case of loans up to ₹ 10 Lakhs extended to units in the MSE sector. Therefore, only the assets created would be hypothecated/ mortgaged/ pledged to bank for advancing loans. The branches have to obtain Guarantee cover from Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) setup by Small Industries Development Bank (SIDBI). or any other appropriate guarantee fund for the purpose of availing guarantee cover for SEP loans as per the eligibility of the activity for guarantee cover.

Interest subsidy

The financial assistance available to urban poor in setting up individual and group enterprises will be in the form of Interest subsidy on the bank loans. Interest subsidy, over and above 7% rate of interest will be available on a bank loan for setting up of individual or group enterprises. The difference between 7% p.a. and the rate of interest charged by the bank will be provided to banks under DAY-NULM. Interest subsidy will be given only in case of timely repayment of loan. Suitable certification from banks will be obtained in this regard. An additional 3 percent interest subvention will be provided to all Women Self Help Groups (WSHGs) who repay their loan in time. The Interest subsidy will be subject to timely repayment of the loan (as per the loan repayment schedule) and suitable certification obtained from bank by the ULB. The additional 3% interest subvention amount will be reimbursed to the eligible WSHGs. The bank should credit the amount of 3% interest subvention to the eligible WHSGs accounts and thereafter seek the reimbursement.

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1. Bank of Maharashtra being a Public Sector Bank is always forefront for implementing the various schemes for uplifting the lives of economic poor’s, women’s and children is launched by Central / State Governments. Bank of Maharashtra is implementing the SHG credit linkage programme as per directions from Govt of India & RBI since 1992.
2. The Ministry of Rural Development (MoRD), Government of India launched the National Rural Livelihood Mission (NRLM) by restructuring Swarnajayanti Gram Swarojgar Yojana (SGSY) with effect from 01st April 2013.
3.  NRLM was renamed as DAY-NRLM (Deendayal Antyodaya Yojana - National Rural Livelihoods Mission) w.e.f. March 29, 2016.
4. The DAY-NRLM is the flagship program of Government of India for promoting poverty reduction through building strong institutions of the poor, particularly women, and enabling these institutions to access a range of financial services and livelihoods. DAY-NRLM adopts a demand driven approach, enabling the States to formulate their own State specific poverty reduction action plans.
5. The key features of DAY-NRLM: -
   1. Universal Social Mobilization
   2. Participatory Identification of poor (PIP)
   3. Promotion of Institutions of the poor
   4. Strengthening all existing SHGs and federations of the poor.
   5. Emphasis on Training, Capacity Building and Skill Building
   6. Revolving Fund and Community Investment Support Fund (C.I.F)
   7. Universal Financial Inclusion
   8. Provision of Interest Subvention
   9. Funding Pattern
   10. Phased Implementation
   11. Intensive blocks
   12. Rural Self Employment Training Institutes (RSETIs)
6. Eligibility Criteria for SHGs to avail loans: -
   • SHGs should be in active existence for at least 6 months as per their books of accounts (and not from the date of opening of S/B account).
   • SHGs should be practicing ‘Panchasutras’ i.e., regular meetings, regular savings, regular inter-loaning, timely repayment and up-to-date books of accounts. 
   • SHGs should qualify as per grading norms fixed by NABARD. As and when the federations of the SHGs come into existence, the grading exercise may be done by the federations to support the banks
   • The existing defunct SHGs are also eligible for credit if these are revived and continue to be active for a minimum period of three months.
7. Loan Amount-

   SHGs may avail either Term Loan (TL) or a Cash Credit Limit (CCL) or both based on their requirement. In case of need, additional loan may be sanctioned even though the previous loan is outstanding, based on the repayment behaviour and performance of the SHG.

   A. Cash Credit: -

   Minimum loan of Rs. 6 lakhs to each eligible SHG for a period of 3 years with a yearly drawing power (DP). The drawing power may be enhanced annually based on the repayment performance of the SHG.

   The drawing power as follows: -

   Year	Drawing Power
   First Year	6 times of the existing corpus or minimum of Rs.1.5 lakh, whichever is higher
   Second Year	8 times of the corpus at the time of review/enhancement or minimum of Rs.3 lakh, whichever is higher
   Third Year	Minimum of Rs.6 lakh based on the Micro Credit Plan (MCP) prepared by SHG and appraised by the federations/support agency and the previous credit history.

   Fourth year onwards: Above Rs.6 lakhs, based on the Micro Credit Plan (MCP) prepared by SHG and appraised by the federations/support agency and the previous credit history

   B. Term Loan: -
   Loan amount in doses as mentioned below:

   	Amount of Loan
   First dose	6 times of the existing corpus or minimum of Rs.1.5 lakh, whichever is higher
   Second dose	8 times of the corpus at the time of review/enhancement or minimum of Rs.3 lakh, whichever is higher
   Third dose	Minimum of Rs.6 lakh based on the Micro Credit Plan (MCP) prepared by SHG and appraised by the federations/support agency and the previous credit history.

   Fourth dose onwards: Above Rs.6 lakhs, based on the Micro Credit Plan (MCP) prepared by SHG and appraised by the federations/support agency and the previous credit history

   (Corpus is inclusive of revolving funds, if any, received by the SHG, its own savings, interest earned by the SHG from on-lending to its members, income from other sources, and funds from other sources in case of promotion by other institutes/NGOs.)

8. Security and Margin
   1. For loans to SHGs up to ₹10.00 lakh, no collateral and no margin. No lien marked against savings bank accounts of SHGs and no deposits insisted upon while sanctioning loans.
   2. For loans to SHGs above ₹10 lakh and up to ₹20 lakh, no collateral, No lien marked against savings bank account of SHGs. However, the entire loan (irrespective of the loan outstanding, even if it subsequently goes below ₹10 lakh) shall be eligible for coverage under Credit Guarantee Fund for Micro Units (CGFMU).
   3. For loan to SHGs above ₹10 lakh and up to ₹20 lakh, a margin not exceeding 10% of the loan amount exceeding ₹10 lakh may be obtained as per the bank’s approved loan policy.
9. Rate of Interest-

   Limit	Proposed ROI
   Up to Rs.3 Lakh	@7.00% p.a. (where interest subvention is available from Central Govt.)
   Above Rs.3 Lakh and up to Rs.5 Lakh	@ 1 Year MCLR (where interest subvention is available from Central Govt.)
   Above Rs.5 Lakh	@1 Year MCLR + (0.50% BSS) + 1.50 %

10. Interest Subvention Scheme for SHGs-

    Bank is implementing the DAY-NRLM scheme as per guidelines issued by MoRD, Govt of India and Reserve Bank of India time to time. MoRD, Govt of India has been providing the Interest Subvention (above the 7 % Rate of Interest applied) for loan granted to Women SHGs up to limit of Rs.3.00 Lakh in identified 250 Districts.

    MoRD, Govt of India has revised the DAY-NRLM Scheme from FY 2022-23. Accordingly, RBI vide its Master Circular dated 20.07.2022 has issued updated guidelines for implementation of DAY-NRLM

    Now, Interest Subvention Scheme for Women SHGs will be available as under: -

    Limit	Pre-condition	Interest Subvention
    Up to Rs.3 Lakh	At Concessional Interest Rate of 7% P.A.	@ 4.5% p.a. uniform during FY 2022-23
    Above Rs.3 Lakh and up to Rs.5 Lakh	Interest rate equivalent to 1 Year MCLR or any other external benchmark based lending rate or 10% p.a., whichever is lower.	@ 5 % p.a. uniform during FY 2022-23

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1. Introduction-
   • RSETIs stand for Rural Self Employment Training Institutes. RSETIs are managed by Banks with active co-operation from the Government of India and State Government. Dedicated institutions designed as to ensure necessary skill training and skill up gradation of the rural BPL youth to mitigate the unemployment problem
   • These are promoted and managed by banks with active cooperation from state governments. RSETI concept is based on RUDSETI (Rural Development and Self Employment Training Institute), a society established jointly by three agencies i.e. Syndicate Bank, Canara Bank and Sri Manjunatheswara Trust based at Ujire in Karnataka.
   • One RSETI is established in every district in the country. Concerned bank is the lead bank in the district takes responsibility for creating and managing it
2. Bank of Maharashtra has established eight RSETIs viz. Pune, Thane, Nashik, Chhattrapati Sambhajinagar, Jalna, Amravati, Nagpur & Palghar districts of Maharashtra State.
3. RSETI aims to train and empower rural poor’s to become independent entrepreneurs by offering professional training and supporting them for their settlement. Training programmes conducted by MRSETI are residential & full time and are free of cost.
4. Though RSETIs main target group is rural poor, women’s are the main beneficiaries of this project RSETIs are offering training in courses and women’s are participating as per their need and objective for starting up the self-employment to become entrepreneur. Also some specific batches are sponsored by state SRLM as per their requirement in Rural Livelihood Mission. While RSETIs conduct, some courses which are purely for women’s.
5. The Courses offered by MRSETI’s-