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Government announced a new Credit Guarantee Fund under the Stand Up India specifically designed to address the needs of the SC/ST categories along with women entrepreneurs.
The government’s ‘Start Up India Stand Up India’ scheme was initially announced by Prime Minister Narendra Modi on 15 August 2015 and is designed to encourage entrepreneurship amongst the youth, especially in semi-urban and rural areas.
The SC/ST categories and women needed specific attention to encourage them to take up self-sustaining entrepreneurship and this scheme addresses that need.
It is expected to benefit atleast 2.5 lakh borrowers. The expected date of reaching the target of at least 2.5 lakh approvals is 36 months from the launch of the Scheme.
Important features of the scheme:
Every branch of each bank will offer loans and credit guarantee protection to at least two entrepreneurs under this scheme.
A fund of Rs 10,000 crore is being set up and will be disbursed by Small Industries Development Bank of India (SIDBI).
All entrepreneurs availing the scheme will be offered mentoring services at the pre-loan and post loan stages, and will also offer guidance on operating their businesses, accessing services like factoring, e-registrations with various online portals and offering their goods and services through e-commerce platforms.
The overall intent of the approval is to leverage the institutional credit structure to reach out to these under-served sectors of the population by facilitating bank loans repayable up to 7 years and between Rs. 10 lakh to Rs. 100 lakh for greenfield enterprises in the non farm sector set up by such SC, ST and Women borrowers.
Under the current proposal, margin money of 25% will have to be contributed by the entrepreneur.
Analysis:
India has vast and untapped youth potential and all cannot be provided with jobs. Therefore, the government has rightly focused on unleashing the entrepreneurial spirit amongst the youth belonging to weaker sections like SC/ST, with special attention to women. It is expected that the Stand Up India scheme will create further jobs and will have a job multiplier effect.
The difference between this scheme and a regular loan offered by a standard bank is that it offers a complete package of mentorship and guidance to the first time entrepreneur. Along with the initial handholding, guidance on go-to-market strategies will help connect rural areas with urban clientele.
Capital risk has been a major reason why most do not take the entrepreneurship path, but now with loans on easy terms and backed with a guarantee, will give a lot of confidence both to the lending bank and the potential entrepreneur to take a business risk. India will now be ready to truly Stand Up.
By: Vishal ProfileResourcesReport error
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