Launched on 5th April 2016. Stand up India Scheme is a business funding by Departmental of Financial Services (DFS), Ministry of Finance, the Government of India to the people from the SC/ST category and Women entrepreneurs
The loan funded by Stand up India scheme ranges from Rs 10 lakh to Rs 1 crore which is given to at least one female borrower per bank branch and at least 1 Schedule Caste or Tribe for setting up a Greenfield enterprise. The enterprise may be manufacturing, services or the trading sector.
Non-individual enterprises can also get a loan but SC/ST or the women entrepreneur should have at least 51% shareholding stake.
Who is eligible for the Stand-up India Scheme?
Certain eligibility criteria need to be fulfilled to apply for a loan:
- The individual must be 18 years or above
- The company must be privately limited/limited liability partnership or a partnership firm
- Only Greenfield projects are eligible under this scheme. Greenfield projects are those which is not constrained by prior work. Construction is done on the unused land where there is no need to remodel or demolish an existing structure. Some of the examples of Greenfield projects are new factories, power plants or airports which are built from scratch.
- For a non-individual enterprise, 51% shareholding should be held either by SC/ST or woman entrepreneur
- The borrower should not have any default to any bank or financial institutions
- Approval is required by DIPP for the company which is dealing in consumer goods that are commercial or innovative.
|Stand Up India Scheme Snapshot|
|Eligible Projects||Only Greenfield Projects (first-time venture)|
|Loan amount||Between Rs. 10 lakh and Rs. 1 crore|
|Interest Rate||Bank’s MCLR + 3% + tenor premium|
|Repayment Tenure||Max 7. Years with moratorium period up to 18 months|
|Shareholding Stake||51% for non – individual enterprise|
|Borrowers financial repayment status||Never defaulted any bank or NBFC|
|Working Capital Limit||Up to Rs. 10 lakh in form of cash credit limit|
|Borrowers own investment||10% of the project cost as own contribution|
GST & service tax will be levied extra on the mentioned charges.
What is the benefit of the Stand-up India scheme?
Following are the benefits for the new entrepreneurs:
- Encourage and motivate new entrepreneurs to generate employment
- Entrepreneurs get professional guidance on legal matters, business set up for the initial 2 years
- Post setup aid is also provided
- Longer tenure of 7 years reduces the stress of repayment for the borrowers
- The scheme removes the obstacles regarding legal, operational and other institutional matters
- The scheme leads to the empowerment of women, Dalits and tribal.
- It will lead to the financial and social inclusion of these demographics of the society
How to apply for the Stand-up India scheme?
Branches of scheduled commercial banks can be approached in three ways:
- Visit the Bank branch directly
- Visit the Stand-up India online portal www.standupmitra.in
- Can connect with the lead district manager. The link https://www.standupmitra.in/LDMS contains the district manager details
What are the documents required for Stand-up India scheme?
- Identity proof of the Proprietor, Partner (in case of a company): Voter’s ID Card/PAN card/Passport/Driving license/
- Residence proof: Recent telephone bills, electricity bill, a property tax receipt
- Business address proof
- Applicant should not be a defaulter in any financial institution/bank
- Asset & liabilities statement of promoters & guarantors
- Latest Income tax return copy
- Rent agreement of the business premises (if rented) and clearance from the pollution control board if applicable
- Memorandum of Association/Article of Association of the Company or Partnership Deed of partners, etc.
- SSI/MSME registration if applicable
- Projected Balance Sheets for the next two years
- Photocopies of lease deeds/title deeds of all the properties being offered as primary & collateral securities.
- SC/ST Certificate in case the applicant belongs to the SC/ST category
- Certificate of incorporation from ROC to check whether the majority stake belongs to SC/ST/Woman category.
- For Cases With Exposure above ₹ 25 Lakhs
- Business profile of the company & stakeholders (includes names of promoters, other directors in the company, the activity being undertaken addresses of all offices and plants, shareholding pattern etc.
- Last three years balance sheets of the Associate / Group Companies (if any).
- Project report (for the proposed project if term funding is required) containing details of the machinery to be acquired, from whom to be acquired, price, names of suppliers, financial details like (capacity of machines, assumed utilization capacity, production, sales, projected profit and loss and balance sheets for the tenor of the loan, the details of labour, staff to be hired, basis of the assumption of such financial details etc.
- Manufacturing process if applicable, the major profile of executives in the company, any tie-ups, details about raw material used and their suppliers, details about the buyers, major-competitors details and the company’s strength and weaknesses as compared to their competitors etc.
What are the disadvantages of the Stand-up India Scheme?
- Attention has not been paid to the awareness regarding the socio-economic dimensions of the Dalits and women entrepreneurs. It is required for the scheme to be effective
- One of the criteria of the scheme is that the company should be innovative, which depends upon the discretion of the DIPP resulting in the delay of the project or the entrepreneurial ventures gets shelved.
- The funding support of about 10 lakhs to 1 crore is inadequate for the manufacturing sector.
- There are very few women & SC/ST entrepreneurs that fit the criteria of having a turnover of 25 crores.
- The self-help groups that have been assigned to provide support to the women entrepreneurs in the rural areas are pressed under the vested interest of the locally dominant players as well as the elite class. The scheme does not have any watchdog to address the matter.
- The technological challenges in the rural areas lead to the digital divide or lack of bank linkages resulting between the people and the financial institutions that have not been looked into by the scheme
- Women and the SC/ST lack technical or managerial know how to get access to the skilled labours, raw materials, manpower, etc. Though the scheme provides business guidance, it is not sufficient.
An adequate ecosystem has to be created to educate the SC/ST and women population, who are looking for entrepreneurial ventures as well as provide support to have well equipped rural & cottage infrastructure so that they do not face any operational obstacles during the action.