The Government of India (GOI) has launched several schemes to support and regulate Non-Banking Financial Companies (NBFCs) in their efforts to promote financial inclusion, support small businesses, and drive economic growth.
1. Credit Guarantee Scheme for NBFCs
Objective:
To provide a guarantee for loans extended by eligible NBFCs to Micro, Small, and Medium Enterprises (MSMEs), ensuring credit flow to the MSME sector.
Features:
- Guarantee Coverage: Up to 75% of the defaulted amount for loans extended to MSMEs.
- Eligibility: NBFCs registered with the Reserve Bank of India (RBI) and complying with the guidelines set by the scheme.
- Loan Limit: Varies based on the specific guidelines of the scheme.
Example:
- Name: M/s XYZ Enterprises
- Business: Manufacturing of auto components
- Location: Pune, Maharashtra
- Loan Amount: ₹10,00,000
- Outcome: The NBFC provided a loan to XYZ Enterprises under the credit guarantee scheme, helping the business purchase new machinery and expand its production capacity.
2. Partial Credit Guarantee Scheme (PCGS)
Objective:
To provide a partial credit guarantee to Public Sector Banks (PSBs) for the purchase of high-rated pooled assets from financially sound NBFCs and Housing Finance Companies (HFCs).
Features:
- Guarantee Coverage: First loss up to 10% of the fair value of the assets being purchased.
- Eligibility: NBFCs and HFCs with high-rated pooled assets and compliant with the scheme’s guidelines.
- Purpose: To enhance the liquidity of NBFCs and HFCs by enabling them to raise funds through the sale of their assets.
Example:
- Name: ABC Finance Ltd.
- Assets: Portfolio of auto loans
- Outcome: A public sector bank purchased high-rated pooled assets from ABC Finance Ltd. under the PCGS, providing liquidity to the NBFC and enabling it to extend more loans.
3. Refinance Scheme for NBFCs by SIDBI
Objective:
To provide refinance assistance to NBFCs for extending loans to the MSME sector.
Features:
- Refinance Coverage: Up to 100% of the loan amount disbursed by NBFCs to MSMEs.
- Eligibility: NBFCs with a good track record and compliance with SIDBI’s guidelines.
- Loan Purpose: Working capital, term loans, and other business needs of MSMEs.
Example:
- Name: DEF Finance Ltd.
- Business: Provides loans to MSMEs in rural areas
- Outcome: DEF Finance Ltd. received refinance assistance from SIDBI, which allowed it to extend more loans to small businesses in rural areas, fostering economic development.
4. Pradhan Mantri Mudra Yojana (PMMY) for NBFCs
Objective:
To provide funding to non-corporate small business sector through various financial institutions, including NBFCs.
Features:
- Loan Categories: Shishu (up to ₹50,000), Kishor (₹50,001 to ₹5,00,000), and Tarun (₹5,00,001 to ₹10,00,000).
- Eligibility: NBFCs registered with RBI and participating in the Mudra scheme.
- Purpose: To support small business activities, such as startup funding, business expansion, and working capital needs.
Example:
- Name: GHI Finance Ltd.
- Business: Provides microloans to small retail businesses
- Outcome: GHI Finance Ltd. disbursed Mudra loans to several small retail businesses, helping them with startup capital, working capital, and business expansion.
5. Interest Subvention Scheme for MSMEs
Objective:
To provide interest relief to eligible MSMEs on their outstanding loans from financial institutions, including NBFCs.
Features:
- Interest Subvention: 2% interest subvention on fresh or incremental loans.
- Eligibility: MSMEs with valid Udyog Aadhaar Number (UAN) and GST registration.
- Purpose: To reduce the cost of borrowing for MSMEs, thereby supporting their growth and sustainability.
Example:
- Name: JKL Finance Ltd.
- Business: Provides loans to small manufacturing units
- Outcome: JKL Finance Ltd. extended loans to MSMEs with a 2% interest subvention, reducing their cost of borrowing and supporting their operational and growth needs.
6. Stand-Up India Scheme
Objective:
To facilitate bank loans between ₹10 lakh and ₹1 crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise.
Features:
- Loan Amount: ₹10 lakh to ₹1 crore.
- Eligibility: SC/ST and women entrepreneurs setting up new enterprises in the manufacturing, services, or trading sectors.
- Purpose: To promote entrepreneurship among SC/ST and women, ensuring their participation in the economic growth of the country.
Example:
- Name: PQR Finance Ltd.
- Business: Provides loans to women entrepreneurs
- Outcome: PQR Finance Ltd. financed several women entrepreneurs under the Stand-Up India scheme, helping them start new businesses and contribute to economic development.
Summary
The Government of India has introduced various schemes to support and regulate NBFCs, ensuring they can effectively contribute to financial inclusion and economic growth. Schemes like the Credit Guarantee Scheme for NBFCs, Partial Credit Guarantee Scheme, Refinance Scheme by SIDBI, Pradhan Mantri Mudra Yojana, Interest Subvention Scheme for MSMEs, and Stand-Up India Scheme provide financial assistance, liquidity support, and interest relief to NBFCs and their borrowers. These initiatives enable NBFCs to extend more loans to underserved segments, promote entrepreneurship, and support the growth of micro and small enterprises across India.
