Objective/Purpose: The scheme aims at providing adequate and timely credit (working capital or block capital or both) to small artisans, handloom weavers, service sector, fisherman, self-employed persons, rickshaw owners, other micro-entrepreneurs, etc. from the banking system in a flexible, hassle free and cost effective manner. The facility would also include a reasonable component of consumption needs.
Fixation of Credit Limit (Cash Credit/Term Loan Component):
- To revolving cash credit will be fixed taking into accounts the operating cycle or nature of the activity and shall be fixed based on available balance after sanction of term loan, if any. The working capital or recurring expenditure limit may be in the form of a Revolving Cash Credit and fixed as a percentage of the turnover divided by the number of operating cycles per annum or at 20% of the projected annual turnover. A component for consumption credit not exceeding 20% of limit could be built keeping in view the value of the family labour in the productive activity.
- The term loan will be provided for meeting the investment requirement (for fixed/block capital)
Quantum of Loan: Maximum Rs. 25,000/- per borrower as Working Capital/Term Loan of Composite Loan).In other words, the overall limit for cash credit & term loan component should not exceeds Rs. 25,000/-
Validity & Repayment Period:
- Swarojgar Credit Card (SCC) is normally valid for 5 years subject to satisfactory operation of the account and renewed on a yearly basis through simple review process. The operations in the account should be normal.
- The term loan shall be repayable within 5 years in suitable installment.
Issue of Cards: The Beneficiaries under the scheme will be issued a Credit Card and a Passbook similar to that of KCC. This will serve as an identity card as well as facilitate recording of the transactions on an ongoing basis. The Passbook would contain the repayment schedule of the term loans also. A passport size photograph of the card holder will be affixed on the card as the space provided for. SHGs can also be issued cards in their name and they will be liable jointly and severally for repayment.
Renewal of Limit
- Limit will be renewed annually based on the amount credited to the cash credit account and the repayment performance in the term loan account.
- Under the scheme, term loan component could be enhanced within the overall limit in case of need, subject to satisfactory repayment performance of the borrower.
- The Revolving Cash Credit to the extent of working capital repaid may be renewed within the overall ceiling of Rs 25,000/- and it should be normally repaid within 12 months from the date of drawal. However, minimum discipline expected is that applicable to cash credit account.
- No drawal will be permitted if revolving cash credit remains outstanding for more than 12 months.
- The maximum credits in the account during the 12 months period should normally be equal to the maximum outstanding in the working capital components plus the installments of the term loan availed of, if any.
Operation of Account
- Branch Managers will have absolute freedom to select the clients for the Swarojgar Credit Card (SCC). There will be no subsidy from the Government under this scheme.
- The borrower can avail the credit facility as per his/her requirements i.e. either term loan or working capital loan or a combination of both.
- Withdrawal from the account will be through withdrawal slips/cheques. The SCC and Passbook should be produced each time cash withdrawal is made.
- Opening of SB Account should not be a pre-condition for issue of SCC. However, in case card-holder desires on his/her own to open SB Account, he/she may be allowed to do so.
- Rate of interest as applicable to SB Accounts should be paid on Credit Balance in cash credit accounts under Swarojgar Credit Card Scheme.
Rate of Interest: Applicable as per prevailing rate and subject to change from time to time.
Security: Only Hypothecation of assets created out of Bank loan and no collateral security is required.
Insurance: All Swarojgar Credit Card holders shall have to be covered under Group Insurance Scheme and premium shared between bank and borrower.
Processing Fees: Not applicable
Pre-Payment Charges: Not Applicable