K!!!\DI AND VILLAGE INDUSTRJrES CONIMISSION mla ROAD. V LE PARLE(WESI1-MUl\iBAI-54~ CIRCULAR

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1 K!!!\DI AND VILLAGE INDUSTRJrES CONIMISSION mla ROAD V LE PARLE(WESI1-MUl\iBAI-54~ No:ECR/MMS/SFC/Policy/M-177/2000 CIRCULAR Date:) f~{~ The Commission in its 485th meeting held on 28/ decided that State Financial Corporations (SFC's) be involved in implementation of KVIC's Mar~~nMoney Scheme on t~e recommendation of Reserve Bank of ][ndiaand claims be settled by KYIC on reimbursement basis,'3fib KYlC has decided that the Margin Money daims for the projects financed by State Financial Corporations be sett~~d by the respective State Klhadi and Village Industries Board on actual reimbursement Initially 5 SI;C's it:: Delhi Financial Corporation, Gujarat State Financ:al Corporation, Haryana Finan<:ialCorporation, Kerala Financial Corporation and Karnatc:lcaState Financial Corporations which are categorized as <A' by UDBIas infonned by SIDBI be involved in implementation of KVIC's Margin Money Scheme in the first phase The Margin Money Scheme(1\-1MS)to be implemented FinancialCorporations is as follow): through these 5 State A TH]~ SCHEME 25% of the prc~t?ctcost for the pnjects upto ItslOOOlakhs be provided as "Margin,~ Money" For projects abov~;rs 1000 lakhs and upto Ib25 00 lakhs,ratc:~of Mar!~n Money will be25% ofrslooo lakhs plus 105 cfthe remaining cost of the project In,:ase of Weaker Section beneficiary viz SC/ST/OBC,WomenJPhysically Handicapped/Ex-Servicemen and Minority Commur~ty beneficiary/ institution and for Hill Border and Tribal Areas, North Eastern lt~gion, Sikkim, Andaman &: Nicobar Islands, Lakshadweep, Margin Money grant will be at the rate of 30% of the project cost upto Rs1O00 l~khs and above this amount upto Rs2500lakhs, it will be 10% of the remaining cost of the projt~ct Project cost will include on,~cycle of\vorking Capital Margin Money Scheme is ~pi-lec~blefor new Village Industry Projects Khadi & Polyvastra, industril~sas p~r the ncg<!tivelist ofkvic are kept outside the purview of the Margin Money Sch~~me

2 The State Financial Corporations will initially sanction 90% of the project cost in case of general category beneficiary/institution and 95% of the project cost in case of Weaker Section beneficiary/institutionand disburse;:filiiamount suitably for setting up of the project BBENEFICIARU~S: Individuals/entrepreneursfi)r projects with ceiling limit upto RsI000 lakhs Institutions/Cooperative Societies/Trusts for projects with ceiling limit upto Rs2500 lakhs (Note: Partnership firms are ineligi'jleto avail funds under Margin Money Scheme) CMODAl,ITJES OF _rue SCHEME FOR mfplementat][on THROUGH STATE FINANCIAL OQRPOR<\TIGN (SFC'S1 (i) KVlC's Margin Money ~;cheme is to b,~ implemented by 5 State Finan<:ial Corporations(SFC's) in tbe first phase -'- The intending SF'C have to request the KVIC for implementation of Margin Money Scheme preferably by fumishing their latest Audited Annual Report and Audited Balance Sheet with lendable fund under Margin :\1oney Scheme to the Directorate of Economic Research, KV1C, Mumbai-56 Such lendable portfolio for every financial YI~ar has to be communicated by each SFC to KV1C and concerned State Khadi & VIBoard (ii) Afte:r obtaining Com~ssim's 2cproval, the Directorate of Economic Research will intimate SFC to :o~ :mp:em~ntation of Margin Money Scheme on actual reimbursement basis - (iii) SFC will ensure that each project fulfills the criteria of "Village Industry","Percapita fixed investment","own Contribution" and is located in "Rural Area" as per norms presciibed by KVle (a) Village Industry means: Any industry located in rural area which produces and goods or nmders and services with or without the power and in whi(:h the fixed capital investment per head does not exceed Rs50,000/ or such other figure as the Central Government may spe,~i!)from time;:to time However, industries/activities classified under "Negative list"(copy enciost~d) shall not be eligiblefor funding under the Scheme 2

3 1 (b) Rural Area me:lll1ls: The area classified a; Village unde1rrevenue rel::ordsof the DistIiet and includes the area rompriscd in any to'v'oti, the popullationof which does not exceed twenty thousand or such other figure as the Central Government may specify from time 1:0time (iv) SFC's will appraise: proje:cts technically as well as e<conomi(~allyand take th(~ir own credit deeision on the basis of viability of each project (v) SFC must ensure investment of "Own Contribution" of the, r" entrepreneur/individual/institutionfcooperative Society 10% of the total cost of the project for general category and 5% in the case: of Weaker Section beneficiary/institution SC/ST/VvomenfMinority/Ex-Servicemen and Physically HaI1ldicappl~dpersons, NOJ1h Eastem Region, Sikkim, Andaman & Nicobar Islands, Lakshadweep Hill Border and Tribal Areas are treated as weakt~r section beneficiary/institutionor Areas (vi) Once the Margin Money is released in favour of the loanee, it should be kept in Ten'll Deposit for 2 years at SFCs level in the nanle of the beneficiary and interest on such d,epositvimbe utilized to s(~rvicepartial interest burden on the loan disbursed to the beneficiary Since the "Mar~~l1Money" is to be provided in tht~ form of middle-endlr, (vii) subsidy(grant);,it 'will be <c1iedit~d to t1jcbon"ower's loan account after 2YI~arsITomthe date mceip1tof the r1argmmon~y hy the SFC where it will be kept in Term Deposit for 2 years in the name of the bonrower/institution (In case, the SFC's advance goes "bad" befi)re 2years pc~ri()dis over, Margin Money wil]1bl~:adjusted by the SFC to liquidate loan liability of the borrower either in part or full) (viii) In case any recovery is effect,ed subsequently by the SFC ITom any source whatsoever, such recovel)' will b~ utilized by the SFC for liquidating their outstanding dues first,anysurplus ther<eafterwill be remitted to KVIC!KVIB (ix) Margin Money will be one time assi~;tance from JKVIC/KVIB For any l!;~nhancl:;:ment of credit limit, the KVIC's Margin Mom:y assistance will not be available 3

4 (x) PROJECT COST INCLUDES: ACapital Expenditure Mfans of Financ,e (i) Workshed (ii)machinery/ Equipments Rs: Own Contribution :Rs: Rs: Term Loan for Fixed Capital BWorking Capital (One cycle) Rs: O:shCredit for Workjng Capital Rs: Total Cost Rs: Rs: Rs: (xi) The,SFCs will initiallysanctiontotal project cost(-) minus own cont!;butionof the beneficiary, ie 90% 3r 95% of the project cost, as the case may be, and dlsburse the full amount of the project cost suitably for setting up of the project, before sending its claim to the concl~rned KVI Board Claim should be SUpp()rt~~dwith certified ledger extract ofloan disbursement -- " (xii) The SFC's may prefer Margin Money claims as per Annexure-'A~' enclosed directly to the respective State/UT Khadi & VIBoard's Head Office for payment of Margin Money by the State/UT ICVIBoard, on aetual reimburse:mentbasis along with a copy of th(~certifh~drelevant ledger extract of thl~loan account Such claims are to be compiled and forwarded on monthly basis (xiii) All claims sanctioned awl ::F;\)U[sedby SFC have to be compiled contdining districtwise details, m~ monthly tasis and forwarded along with the original papers of Margin Money Claims in a conwlidated format to the respective StatefUT Khadi & VIBoard's Head Office for reimbursement ofmar~~n Money, (xiv) The StatelIJT Khadi & VIBoard and KV][C will be free to conduct sample checks of the beneficiaries financed under this Seheme by the SFC's as a part of the monitoring of the Scheme (xv) The SFC and the State/{JT KVl Board will submit districtwise Quarterly Progfll~ss Report to the Directorate of Eemmmic Resl~arch, KVIC, Mumbai-56 with an endorsement to the con-;;emedstate/regiollal Offic(:ofKVlC as per the:format placed at Annexure-'; B'

5 ~ Sfc:-policy \ \- (xvi) Sueh Quarterly Progres~:Reports should also include the: dlistrictwise monthly statem~mtof J\1arginl\,loney claims submitt~dand claims settl,edas pe:rthe format placed at AnIlle:xure~'C' (xvii) In order to facilitate operational planning at the StateJUT Khadi & VJBoard, at the end of each quarter, the SFC may indicate a realistic quarterly target of projc~cts proposed to be fimmc(~:dand requirement of Margin Morueyfor next quarter (xviii) Apart fi'om the above requirements/conditions, KVIC and/or respective State/UT Khadi & VIBoard may c:allfor any other imormatilontrom time to time which may be necessary for the monitoring and operational purpose of the Scheme D rv1[arketinglinkages; ~ There are over 15,000 sales outliets run by KVICIKVIBs/Societies/Tmsts assisted by KVIC/KVIBs These :salesoutlets are part of the marketing support system for Khadi & VIproducts, ofinstitutions/entn;~preneursassisted by KVIC/KVIBs/SFCs Encl: as above Date: ~' 0q\ (RKBHA GA VA) Chief Executi I Officer PhNo(022) ~ To, 1 2 Managing Directors 5 Si:atcFinancial Corporations MD/CEO/MS/Sec:r~:taryof5 S\::a\;e K\J'I Bs Copy to: 1) 2) 3) 4) All Heads of Offices/Departments under the Commission in and outside Mumbail A11Sections in the Central Office of the Conmtission The DyDirector(IT), KVIC, Mumbai for publication on 'Website The Director(Pub~icil~KVIC,Mumbai for publicationin <Jagriti' lli,~ ~H[II:F E:KECU'~] - OF'P'ICER

Schemes->Margin Money Scheme of Khadi & Village Industries Commission (KVIC) MARGIN MONEY SCHEME OF KHADI & VILLAGE INDUSTRIES COMMISSION (KVIC)

Schemes->Margin Money Scheme of Khadi & Village Industries Commission (KVIC) MARGIN MONEY SCHEME OF KHADI & VILLAGE INDUSTRIES COMMISSION (KVIC) Implementing Agency Official(s) to be contacted Khadi &