Stand Up India Budget 2019: What’s in it for entrepreneurs?

Everything about the Stand Up India Scheme and how the Union Budget 2019 is going to affect the same.

Know More about the Stand Up India Scheme and Budget Recommendations

Stand Up India scheme was launched in 2016 with the aim of financing scheduled caste, scheduled tribe and/or women entrepreneurs. The scheme provides bank loans between Rs.10 lakhs and 1 crore to at least one person who is either a woman or a member of a scheduled caste/scheduled tribe community. The loan is given for setting up a greenfield enterprise in the manufacturing, services or trading sector. In case the loan is applied by a commercial enterprise, at least 51% of the shares must be held by a woman or a person of SC/ST community.  

Related: How is the 2019 Budget going to help Self Help Groups?

Eligibility

The applicant woman or person of SC/ST community must be of 18 years or above. The purpose of the loan should be a greenfield project, which means that it should be the applicant’s first venture in the manufacturing, services or trading sector. The applicant must not be in default with any bank or financial institution.

About the Loan

Branches of scheduled commercial banks in the country can extend this scheme to the applicants. The loan offered can include both term loan and working capital requirement and together can range between Rs. 10-100 lakhs.

The loan size will be 75% of the project cost. However, this percentage will not be applicable if the applicant’s contribution and support from any other scheme exceed 25% of the project cost.  

The rate of interest on the loan will be the lowest rate for that category. Besides, it will not exceed the total of MCLR (base rate), 3% and tenor premium.

Apart from the primary security, the banks may decide that the loan be secured by collateral security or guarantee of Credit Guarantee Fund Scheme for Stand Up India Loans.

The loan must be repaid in 7 years, and there is a maximum moratorium period of 18 months.  

Working capital up to Rs. 10 lakhs can be withdrawn by way of overdraft. The cash credit limit will be used for requirement over this amount. Rupay debit cards can also be used for easy withdrawal.  

Related: Budget 2019: What it means for you?

Budget Announcements

This scheme has been extended till 2025, as announced by the Finance Minister in her recent budget speech. She praised the achievement of the scheme in bringing out thousands of entrepreneurs and helping them set up business and industry. She said that banks would be providing financial assistance for demand-based businesses, for purposes like machinery purchase.  

However, reports coming in from different states have not painted a very rosy picture regarding the scheme’s performance. Last year it was observed that in Maharashtra, urban centres like Mumbai, Pune, Nagpur, Thane and Kolhapur had most disbursals in the state. On the other hand, Hingoli, with 13% of the state’s SC population, had 80 bank branches with not a single beneficiary. More recently in July 2019, banks in Tamil Nadu have been urged to hike disbursals to SC/ST and women. The achievement level has been far below the targets set by the Government of India. However, with the extension until 2025, there is sufficient time for the scheme to come to fruition, even in the states which are currently struggling.

Have a look at the Union Budget 2019 – Key Highlights to gather a comprehensive understanding of the 2019 Budget.

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