The NGO/ MFI to be eligible for financing under the scheme will have to be of any one of the following:
- Societies registered under Societies Registration Act, 1960 or similar State Act.
- Trusts registered under Public Trust Act, 1920 or similar Act.
- Companies registered under Companies Act, 1956 including Section 25 companies.
Non Banking Financial Companies providing financial services to SHGs which satisfy the following criteria as laid down by RBI (vide master circular on Micro Credit, item 3, page 5 RPCD: MFFI.BC. No. 08/12.01.001/2007-08 dated 2nd duly 2007) may only be taken up for financing:
- Engaged in micro financing activities
- Licensed under section 25 of the companies Act, 1956. Which are not accepting public deposits from the purview of sections 45-IA (registration), 45-IB (maintenance of liquid assets) and 45-IC (transfer of profits to Reserve Fund) of the RBI Act, 1934.
- Other terms and conditions as applicable to financing to NBFC as laid down by the Bank vide SIB Circular No. 34/04 dated 27th September, 2004 will also apply.
- Specialist and other Co-operatives such as Mutually Aided Co-operative Societies, etc.
- Any other type of institution that offer micro finance and related services may be considered on merits.
Purpose: To enable the Bank to lend to MFIs / NGOs for on lending to SHGs. It will also enable the Bank to increase the outreach by financing large number of SHGs in a cost effective manner and supplement the efforts of the branches in financing SHGs
Amount of Loan: Requirement of finance to be worked out based on the health of the NGO / MFI and the business plan as per the appraisal format
Rate of Interest: Interest rates:3.00 % above Base Rate.
Security
- Primary - Hypothecation of Book Debts of the NGO/ MFI.
- Collateral - Nil. However, personal guarantee of the Promoters/ Directors and charge over other available assets may be taken if available.
Repayment
- In case of Term Loan: monthly / quarterly / half-yearly.
- Instalments may be set depending on the project / purpose. However, total repayment period should not exceed 3 years.
- Cash credit will be renewed annually
