Self-Employment Program through Credit Linkage
Self-Employment Program through Credit Linkage
Self-Employment Programme (SEP) Component focuses on financial assistance to individuals/groups of urban poor for setting up gainful self-employment ventures/ micro-enterprises, suited to their skills, training, aptitude and local conditions. The component also supports Self Help Groups (SHGs) of urban poor to access easy credit from bank and avail interest subsidy on SHG loans. This component further focuses on technology, marketing and other support services to the individuals, group entrepreneurs, SHG members and Urban street vendors/ hawkers engaged in micro enterprises for their livelihoods.
The underemployed and unemployed urban poor is encouraged to set up small enterprises relating to manufacturing, servicing and petty business for which there is considerable local demand. Local skills and local crafts are particularly encouraged.
The percentage of women beneficiaries under SEP is generally higher than 30 percent. SCs and STs are benefited at least to the extent of the proportion of their strength in the city/town population of poor. A special provision of 3 percent reservation for the differently-abled is made under this programme. 15 percent of the physical and financial targets under this component is earmarked for the minority communities.
Financial Inclusion
Bank Linkage is an intervention which ensures the “Right to Credit” for the poor by enabling access to formal banking and financial services. Right to Credit is ensured in the programme by ensuring not just Access, but also Adequate and Timely credit at Affordable interest rates. Bank Linkage has brought innumerable households out of the debt trap and enabled subsequent access to finance to start Income Generating activities for diversifying and augmenting their family income thereby enabling a good quality of life and a way out of the cycle of poverty.
Individual/Groups to avail loans at lower rate of interest and build a strong relationship with bankers for up-scaling their economic activities by availing higher quantum of loans continuously. Timely and adequate credit delivery at a reasonable rate of interest under the Interest Subvention component of the programme has enabled economic empowerment of women in the state.
Individual Enterprises – SEP –I (Loan and Subsidy):
An urban poor individual beneficiary desirous of setting up an individual micro-enterprise 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 individual micro-enterprises cases is Rs 200,000 (Rs Two Lakhs)
Collateral on Bank Loan: No collateral is required. As per RBI Circular RPCD.SME & NFS. BC.No. 79 /06.02.31/2009-10 dated May 6, 2010 banks are mandated not to accept collateral security in the case of loans up to 10 lakhs extended to units in the MSE sector. Therefore, only the assets created are hypothecated/ mortgaged/ pledged to banks for advancing loans. The banks may approach Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) setup by Small Industries Development Bank (SIDBI) and Government of India for the purpose of availing guarantee cover for SEP loans as per the eligibility of the activity for guarantee cover
Repayment: Repayment schedule ranges from 5 to 7 Years after initial moratorium of 6-18 months as per norms of the banks.
Achievement: For the FY 2023-24 up to 30th September 3399 individuals have received bank loans to the tune of INR 21.80 crores
Group Enterprises – SEP –G (Loan and Subsidy)
A Self Help Group (SHG) or members of an SHG constituted under SJSRY/ NULM or a group of urban poor desirous of setting up a group enterprise for self-employment can avail benefit of subsidized loans under this component from any bank. The norms/ specifications for group micro-enterprise loans are as follows
Eligibility: The group enterprise should have minimum 3 members with a minimum of 70% members from urban poor families. The application/ intent to set up a group micro enterprise loans are follows:
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 Maximum unit Project Cost for a group enterprise is Rs 10,00,000 (Rs Ten Lakhs)
Collateral Guarantee on Bank Loan: No collateral guarantee is required. Only the assets created are hypothecated/ mortgaged/ pledged to banks for advancing loans. The banks may approach Credit Guarantee Fund Trust for Micro and Small Enterprises.
Repayment: Repayment schedule ranges from 5 to 7 Years after initial moratorium
Achievement: For the FY 2023-24 up to 30th September 1590 SHG groups have received bank linkage to the tune of INR 57.02 crores
SHG Bank Linkage and Subsidy/Subvention
A Self-Help Group (SHG) constituted under SJSRY/ NULM can avail benefit of subsidized loans under this component from any bank. The norms/ specifications for the group loans are as follows:
Eligibility: The SHG should have minimum 10 members with a minimum of 70% members from urban poor families. The application/ intent to set up a group loans are follows:
Age: All members of the group enterprise should have attained an age of 18 years at the time of applying for bank loan.
Maximum loan: There is no limit for SHG bank linkages for providing interest subsidy/subvention.
Collateral Guarantee on Bank Loan: No collateral guarantee is required. Only the assets created are hypothecated/ mortgaged/ pledged to banks for advancing loans. The banks may approach Credit Guarantee Fund Trust for Micro and Small Enterprises.
Repayment: Repayment schedule ranges from 5 to 7 Years
Achievement: For the FY 2023-24 upto 30th September 18116 SHG groups have received bank linkage to the tune of INR 1188.75 crores
Direct Benefit Transfer to TNULM Beneficiaries – PaISA Portal
PAiSA, an acronym for “Portal for Affordable Credit and Interest Subvention Access” is a centralized portal for the processing of interest subvention on bank loans to beneficiaries under Deendayal Antyodaya Yojana – National Urban Livelihoods Mission (DAY-NULM).As per DAY – NULM guidelines the SHG RF and interest subvention for credit linkage through banks is released through PAiSA portal from May 2020. Data of SHGs eligible for RF and SHGs/Individuals eligible for Bank Loans is transmitted from DAY- NULM MIS to the PAiSA portal and same is being verified by the banks concerned each month. Bank accounts found correct by the banks is visible to the ULBs for further verification / approval. After completion of ULB level approval this account is being visible in state login for approval/ rejecting payments. Approved RF and Interest Subvention amount is being credited in beneficiary account through Direct Benefit Transfer.
Pattern of Financial Assistance
The financial assistance available to urban poor in setting up individual and group enterprises is in the form of Interest subsidy on the bank loans. Interest subsidy, over and above 7% rate of interest is available on a bank loan for setting up of individual or group enterprises. The difference between 7% p.a. and the prevailing rate of interest is provided to banks under NULM. Interest subsidy is given only in case of timely repayment of loan. Suitable certification from banks is obtained in this regard.
SEP - Bank Linkages to SHG (SEP-BL to SHG):
All scheduled commercial banks (SCBs), Regional Rural Banks (RRBs) and cooperative banks, which are on the Core Banking Solution (CBS) platform are eligible for getting interest subvention under the scheme
| Criterion | Individual Enterprise | Group Enterprise | SHG Bank Linkage |
|---|---|---|---|
| Beneficiary | Individual urban poor beneficiaries | Group urban poor beneficiaries | Healthy SHGs doing regular thrift and credit |
| Loan Purpose | To set up micro enterprise | To set up micro enterprise | SHG internal lending |
| Maximum Amount | Rs.2 Lakh | Rs.10 Lakh | No Maximum Limit |
| Subsidy | Interest subsidy over and above 7% per annum rate of interest | Interest subsidy over and above 7% per annum rate of interest | • Interest subsidy over and above 7% per annum rate of interest. • An additional 3 percent interest subvention is provided to all Women SHGs (WSHGs) who repay their loan in time. |
Financial Literacy
Financial literacy is the ability to understand and effectively use various financial skills and refers to the knowledge and understanding of various financial products. It helps individuals manage their money, personal finances and investment. Its primary purpose is safeguarding individuals from financial frauds and scams.
Financial literacy is an essential learning for SHG members. TNULM conducts regular camps where the beneficiaries will be made aware about savings, credit, remittance, Insurance etc., along with the modalities and operational requirements for accessing the same. The banks, financial Institutions, insurance agencies, micro finance agencies are also encouraged to communicate with the urban poor through City Livelihood Centers (CLCs), campaigns etc.
Modules of Financial Literacy focus mainly on understanding the language of money in terms of income, expenditure, cashflow, profit and loss. It focuses on teaching the SHG members the discipline of monthly savings, investing the saved funds, setting financial goals and achieving them, acquiring capital for undertaking micro-enterprises and accessing affordable credit from trustworthy financial institutions. Financial literacy modules also focussing on creating awareness on government entitlements, safety nets, welfare schemes and accessing loans through nationalized banks. It focuses on the discipline of making good credit history, digital finance and internet security while accessing banking services.
TNULM has consistently worked towards training all its SHG members towards financial literacy. Till date, 13, 64, 412 SHG members have been given financial literacy training and they are able to undertake SHG internal lending and external banking transactions on their own. This is a significant achievement of the Mission in urban Tamil Nadu.
Entrepreneurship Development Programme (EDP)
ULBs are conducting Entrepreneurship Development Programme (EDP) for 3-7 days for individual and group entrepreneurs. Entrepreneurship Development Training covers basics of entrepreneurship development such as management of an enterprise, basic accounting, financial management, marketing, backward and forward linkages, legal procedures, costing and revenue etc. In addition to above topics, the module also includes group dynamics, allocation of work, profit sharing mechanism etc. for group enterprises.
Entrepreneurship Development Program aims to impart the following learnings to the urban poor to prepare them for undertaking business activities:
a) To make aware/train entrepreneurial culture among people.
(b) To motivate young persons (Men and Women) representing different sections of society, including SC, ST, Women and Physically Challenges and BPL persons, to consider entrepreneurship or self-employment as one of the career options.
(c) To enable the target group to think and act in an entrepreneurial way by imparting technical and business skills at an early stage in their career, so that it not only encourages them to consider entrepreneurship as a career opportunity but also helps them become successful in any profession.
(d) To provide basic entrepreneurship training aimed at helping entrepreneurs to put their ideas into action, bring an attitudinal & behavioral change in the target group and build their personal entrepreneurial skills.
(f) To develop technical and vocational skills or upgrade existing skills of the target group.
(g) To support the establishment of new MSMEs and enhance growth of existing ones which will result in improved productivity and job creation. The Implementing Agencies (IAs) will be entrusted with the task of Udyam Registration of ESDP beneficiaries.
Step 1
Interest Subvention & Loan applications are submitted by Beneficiaries to ALF/CRPs/COsÂ
Step 2
ULB - Scrutinize the application based on eligibility criteria.
Step 3
Basic Information of application updated in MIS by ULB
Step 4
Task Force Committee - Loan proposal analyzed, customized if required and recommended to concerned bank branches.
Step 5
The concerned ULBs update the loan details into online MIS portal after disbursement of every loan.
Step 6
Data related to SEP linkage is fetched by PAiSA portal from NULM MIS Portal.
Step 7
Bank-wise segregated beneficiary data is used to extract and generate Master Data
Step 8
After 1st installment paid by Beneficiary, Bank Maker Checker upload Master Data and approved interest subvention
Step 9
Claim data is further divided into ULB/state-wise, visible to ULB/State login
Step 10
Verification and Approval (ULB/State) for payment.
Step 11
Nodal bank (Indian Bank) can view the approved cases
Step 12
Interest Subvention is transferred to beneficiaries through DBT mode.
Step 13
The beneficiaries are getting SMS intimation at once the interest subvention amount credited to their loan account. E.g. SMS - Dear ABC, you’re a/c has been credited by Rs XYZ as DAY-NULM subsidy amount for the MMYYYY
Self-Employment Program through Credit Linkage
Self-Employment Programme (SEP) Component focuses on financial assistance to individuals/groups of urban poor for setting up gainful self-employment ventures/ micro-enterprises, suited to their skills, training, aptitude and local conditions. The component also supports Self Help Groups (SHGs) of urban poor to access easy credit from bank and avail interest subsidy on SHG loans. This component further focuses on technology, marketing and other support services to the individuals, group entrepreneurs, SHG members and Urban street vendors/ hawkers engaged in micro enterprises for their livelihoods.
The underemployed and unemployed urban poor is encouraged to set up small enterprises relating to manufacturing, servicing and petty business for which there is considerable local demand. Local skills and local crafts are particularly encouraged.
The percentage of women beneficiaries under SEP is generally higher than 30 percent. SCs and STs are benefited at least to the extent of the proportion of their strength in the city/town population of poor. A special provision of 3 percent reservation for the differently-abled is made under this programme. 15 percent of the physical and financial targets under this component is earmarked for the minority communities.
Financial Inclusion
Bank Linkage is an intervention which ensures the “Right to Credit” for the poor by enabling access to formal banking and financial services. Right to Credit is ensured in the programme by ensuring not just Access, but also Adequate and Timely credit at Affordable interest rates. Bank Linkage has brought innumerable households out of the debt trap and enabled subsequent access to finance to start Income Generating activities for diversifying and augmenting their family income thereby enabling a good quality of life and a way out of the cycle of poverty.
Individual/Groups to avail loans at lower rate of interest and build a strong relationship with bankers for up-scaling their economic activities by availing higher quantum of loans continuously. Timely and adequate credit delivery at a reasonable rate of interest under the Interest Subvention component of the programme has enabled economic empowerment of women in the state.
Individual Enterprises – SEP –I (Loan and Subsidy):
An urban poor individual beneficiary desirous of setting up an individual micro-enterprise 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 individual micro-enterprises cases is Rs 200,000 (Rs Two Lakhs)
Collateral on Bank Loan: No collateral is required. As per RBI Circular RPCD.SME & NFS. BC.No. 79 /06.02.31/2009-10 dated May 6, 2010 banks are mandated not to accept collateral security in the case of loans up to 10 lakhs extended to units in the MSE sector. Therefore, only the assets created are hypothecated/ mortgaged/ pledged to banks for advancing loans. The banks may approach Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) setup by Small Industries Development Bank (SIDBI) and Government of India for the purpose of availing guarantee cover for SEP loans as per the eligibility of the activity for guarantee cover
Repayment: Repayment schedule ranges from 5 to 7 Years after initial moratorium of 6-18 months as per norms of the banks.
Achievement: For the FY 2023-24 up to 30th September 3399 individuals have received bank loans to the tune of INR 21.80 crores
Group Enterprises – SEP –G (Loan and Subsidy)
A Self Help Group (SHG) or members of an SHG constituted under SJSRY/ NULM or a group of urban poor desirous of setting up a group enterprise for self-employment can avail benefit of subsidized loans under this component from any bank. The norms/ specifications for group micro-enterprise loans are as follows
Eligibility: The group enterprise should have minimum 3 members with a minimum of 70% members from urban poor families. The application/ intent to set up a group micro enterprise loans are follows:
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 Maximum unit Project Cost for a group enterprise is Rs 10,00,000 (Rs Ten Lakhs)
Collateral Guarantee on Bank Loan: No collateral guarantee is required. Only the assets created are hypothecated/ mortgaged/ pledged to banks for advancing loans. The banks may approach Credit Guarantee Fund Trust for Micro and Small Enterprises.
Repayment: Repayment schedule ranges from 5 to 7 Years after initial moratorium
Achievement: For the FY 2023-24 up to 30th September 1590 SHG groups have received bank linkage to the tune of INR 57.02 crores
SHG Bank Linkage and Subsidy/Subvention
A Self-Help Group (SHG) constituted under SJSRY/ NULM can avail benefit of subsidized loans under this component from any bank. The norms/ specifications for the group loans are as follows:
Eligibility: The SHG should have minimum 10 members with a minimum of 70% members from urban poor families. The application/ intent to set up a group loans are follows:
Age: All members of the group enterprise should have attained an age of 18 years at the time of applying for bank loan.
Maximum loan: There is no limit for SHG bank linkages for providing interest subsidy/subvention.
Collateral Guarantee on Bank Loan: No collateral guarantee is required. Only the assets created are hypothecated/ mortgaged/ pledged to banks for advancing loans. The banks may approach Credit Guarantee Fund Trust for Micro and Small Enterprises.
Repayment: Repayment schedule ranges from 5 to 7 Years
Achievement: For the FY 2023-24 upto 30th September 18116 SHG groups have received bank linkage to the tune of INR 1188.75 crores
Direct Benefit Transfer to TNULM Beneficiaries – PaISA Portal
PAiSA, an acronym for “Portal for Affordable Credit and Interest Subvention Access” is a centralized portal for the processing of interest subvention on bank loans to beneficiaries under Deendayal Antyodaya Yojana – National Urban Livelihoods Mission (DAY-NULM).As per DAY – NULM guidelines the SHG RF and interest subvention for credit linkage through banks is released through PAiSA portal from May 2020. Data of SHGs eligible for RF and SHGs/Individuals eligible for Bank Loans is transmitted from DAY- NULM MIS to the PAiSA portal and same is being verified by the banks concerned each month. Bank accounts found correct by the banks is visible to the ULBs for further verification / approval. After completion of ULB level approval this account is being visible in state login for approval/ rejecting payments. Approved RF and Interest Subvention amount is being credited in beneficiary account through Direct Benefit Transfer.
Pattern of Financial Assistance
The financial assistance available to urban poor in setting up individual and group enterprises is in the form of Interest subsidy on the bank loans. Interest subsidy, over and above 7% rate of interest is available on a bank loan for setting up of individual or group enterprises. The difference between 7% p.a. and the prevailing rate of interest is provided to banks under NULM. Interest subsidy is given only in case of timely repayment of loan. Suitable certification from banks is obtained in this regard.
SEP - Bank Linkages to SHG (SEP-BL to SHG):
All scheduled commercial banks (SCBs), Regional Rural Banks (RRBs) and cooperative banks, which are on the Core Banking Solution (CBS) platform are eligible for getting interest subvention under the scheme
| Criterion | Individual Enterprise | Group Enterprise | SHG Bank Linkage |
|---|---|---|---|
| Beneficiary | Individual urban poor beneficiaries | Group urban poor beneficiaries | Healthy SHGs doing regular thrift and credit |
| Loan Purpose | To set up micro enterprise | To set up micro enterprise | SHG internal lending |
| Maximum Amount | Rs.2 Lakh | Rs.10 Lakh | No Maximum Limit |
| Subsidy | Interest subsidy over and above 7% per annum rate of interest | Interest subsidy over and above 7% per annum rate of interest | • Interest subsidy over and above 7% per annum rate of interest. • An additional 3 percent interest subvention is provided to all Women SHGs (WSHGs) who repay their loan in time. |
Financial Literacy
Financial literacy is the ability to understand and effectively use various financial skills and refers to the knowledge and understanding of various financial products. It helps individuals manage their money, personal finances and investment. Its primary purpose is safeguarding individuals from financial frauds and scams.
Financial literacy is an essential learning for SHG members. TNULM conducts regular camps where the beneficiaries will be made aware about savings, credit, remittance, Insurance etc., along with the modalities and operational requirements for accessing the same. The banks, financial Institutions, insurance agencies, micro finance agencies are also encouraged to communicate with the urban poor through City Livelihood Centers (CLCs), campaigns etc.
Modules of Financial Literacy focus mainly on understanding the language of money in terms of income, expenditure, cashflow, profit and loss. It focuses on teaching the SHG members the discipline of monthly savings, investing the saved funds, setting financial goals and achieving them, acquiring capital for undertaking micro-enterprises and accessing affordable credit from trustworthy financial institutions. Financial literacy modules also focussing on creating awareness on government entitlements, safety nets, welfare schemes and accessing loans through nationalized banks. It focuses on the discipline of making good credit history, digital finance and internet security while accessing banking services.
TNULM has consistently worked towards training all its SHG members towards financial literacy. Till date, 13, 64, 412 SHG members have been given financial literacy training and they are able to undertake SHG internal lending and external banking transactions on their own. This is a significant achievement of the Mission in urban Tamil Nadu.
Entrepreneurship Development Programme (EDP)
ULBs are conducting Entrepreneurship Development Programme (EDP) for 3-7 days for individual and group entrepreneurs. Entrepreneurship Development Training covers basics of entrepreneurship development such as management of an enterprise, basic accounting, financial management, marketing, backward and forward linkages, legal procedures, costing and revenue etc. In addition to above topics, the module also includes group dynamics, allocation of work, profit sharing mechanism etc. for group enterprises.
Entrepreneurship Development Program aims to impart the following learnings to the urban poor to prepare them for undertaking business activities:
a) To make aware/train entrepreneurial culture among people.
(b) To motivate young persons (Men and Women) representing different sections of society, including SC, ST, Women and Physically Challenges and BPL persons, to consider entrepreneurship or self-employment as one of the career options.
(c) To enable the target group to think and act in an entrepreneurial way by imparting technical and business skills at an early stage in their career, so that it not only encourages them to consider entrepreneurship as a career opportunity but also helps them become successful in any profession.
(d) To provide basic entrepreneurship training aimed at helping entrepreneurs to put their ideas into action, bring an attitudinal & behavioral change in the target group and build their personal entrepreneurial skills.
(f) To develop technical and vocational skills or upgrade existing skills of the target group.
(g) To support the establishment of new MSMEs and enhance growth of existing ones which will result in improved productivity and job creation. The Implementing Agencies (IAs) will be entrusted with the task of Udyam Registration of ESDP beneficiaries.
Step 1
Interest Subvention & Loan applications are submitted by Beneficiaries to ALF/CRPs/COsÂ
Step 2
ULB - Scrutinize the application based on eligibility criteria.
Step 3
Basic Information of application updated in MIS by ULB
Step 4
Task Force Committee - Loan proposal analyzed, customized if required and recommended to concerned bank branches.
Step 5
The concerned ULBs update the loan details into online MIS portal after disbursement of every loan.
Step 6
Data related to SEP linkage is fetched by PAiSA portal from NULM MIS Portal.
Step 7
Bank-wise segregated beneficiary data is used to extract and generate Master Data
Step 8
After 1st installment paid by Beneficiary, Bank Maker Checker upload Master Data and approved interest subvention
Step 9
Claim data is further divided into ULB/state-wise, visible to ULB/State login
Step 10
Verification and Approval (ULB/State) for payment.
Step 11
Nodal bank (Indian Bank) can view the approved cases
Step 12
Interest Subvention is transferred to beneficiaries through DBT mode.
Step 13
The beneficiaries are getting SMS intimation at once the interest subvention amount credited to their loan account. E.g. SMS - Dear ABC, you’re a/c has been credited by Rs XYZ as DAY-NULM subsidy amount for the MMYYYY