Frequently Asked Questions
1. What is the objective of the scheme?
The objective of the scheme is to provide employment to unemployed and bring overall economic growth of rural India through rural Industrialization.
2. Is there any age restriction on the beneficiary? -No-
3. Is there any minimum qualification prescribed? -No-
4. Who can avail the Margin Money under the scheme?
Individuals, Self Help Groups and Institutions can avail loans from banks and margin money from the Board.
5. Does KVIC directly finance under the scheme?
No. KVIC do not extend any loan under the scheme. KVIC provides only Margin Money.
6. What are the conditions to be fulfilled to become eligible for financial assistance under the scheme?
The prospective beneficiary has to fulfill the following conditions.
1. The unit shall be established in a Rural area.
2. The unit shall undertake any village Industry except certain activities excluded by KVIC
3. Per capita investment shall not exceed Rs.50,000/- per employee / worker/ artisan
4. The beneficiary has to make his own contribution as per norms.
7. What is a Rural area?
The population of which does not exceed 20,000 as per 1991 census. Rural area means an area which comprises any Village, and also an area out side the Municipal limits,
8. What is a Village Industry?
Any industry located in rural area with a population of 20,000 or less which produces any goods or render any service with or without use of power is known as Village Industry.
9. What is the quantum of Margin Money available to different categories of prospective beneficiaries?
a. Individuals, SHG’s and Institutions: 25% of the project cost for the project up to Rs.10 Lakhs. If the project cost is above Rs.10.00 Lakhs and up to Rs 25.00 Lakhs, the margin money of Rs.2.50 lakhs will not change.
b. Individuals, SHG’s Institutions (Falling under the category of SC/ST/OBC/Women/Minorities/Ex-Service men/North East Region) 30% of the project cost up to Rs. 10 Lakhs and if the project cost is above 10.00 lakhs and up to Rs. 25.00 lakhs, the margin money of Rs.3.00 lakhs will not change.
10. Is own contribution of the entrepreneur compulsory? If so, the amount to be contributed.
Yes. The institutions and Individuals falling under general category are required to make 10 % of the project cost as their own contribution. The individuals and Institutions falling under question 9 (b) above are required to make only 5% of the project cost as their own contribution.
11. To whom the scheme is not applicable?
The scheme is not applicable to Private limited Companies; partner ship firms and the Entrepreneurs intend to start such of the activities, which find a place in the negative list issued by KVIC. Any Industry/Business connected with meat (slaughtered), its processing, canning and / or serving items made of it as food, production/manufacturing or sale of intoxicant items like Beedi /Pan/Cigar/Cigarette etc. Any Hotel or Dhaba or sales outlets serving liquor, preparation/producing Tobacco as raw materials, tapping of Toddy. Any Industries/Business connected, with cultivation of crops/Plantation like Tea, Coffee, Rubber etc., Sericulture (cocoon rearing). Activities related to Horticulture, Floriculture, Pisciculture, Piggery, Poultry, Animal Husbandry and Project producing Yarn and Cloth (Cotton, Woolen, Silk, Polyvastra) with the help of Power, Textiles out of Silk Yarn. Manufacturing of Polythene Carry Bags, any other item that causes environmental problems.
12. Is it necessary that the application under the scheme is to be sponsored by any Agency?
No. It is not necessary that the application under the scheme is to be sponsored by any other Government Department or for that matter by KVIC, KVIB etc.
13. How the loan applications are processed in the Banks?
Banks will appraise the projects technically and economically and take their own credit decision on the basis of viability of the scheme or project proposed.
14. Whether existing units are eligible under the scheme? - No -
15. Can the beneficiary receive the Margin Money directly from KVIC?
No, the Margin Money is paid to the Financing Bank on the behalf of the beneficiary.
16. Can the Financing bank pass on the Margin Money to the beneficiary in Cash?
No. The Bank cannot pass on the Margin Money to the beneficiary in Cash.
17. How the bank utilizes the Margin Money?
On receipt of Margin Money, the Bank will keep it in a fixed deposit in the name of the beneficiary for two years and then adjust the proceeds accrued in the loan a/c of the beneficiary at the instance of the District Officer of the Board.
18. Is there any ceiling imposed on project cost for various categories? If so, the amount?
Yes. Projects costing up to Rs. 25 lakhs shall only be considered.
19. Does the project cost include working capital?
Yes. The project cost includes one cycle of working capital.
20. Does the project cost include land cost?
No. Land cost shall be excluded from the project cost.
21. What is the loan amount to be disbursed?
95% of the project cost in case of categories under question 9(b) and 90% in general category i.e. 9(a). However investment by the entrepreneurs up to 50% of the cost will be allowed.
22. Who will finance the scheme in addition to Nationalized Banks?
Regional rural banks, private scheduled commercial banks and co-operative banks also finance under this scheme, besides the Nationalized Banks. However the procedure for claiming the Margin Money is different from that of Nationalised Banks.
23. How to apply?
The intended entrepreneur shall approach the district offices of the KVIB with the following papers for the sanction of the Margin Money.
1) Application in the prescribed format with passport size photograph.
2) Detailed project report.
3) Appraisal report of the financing agency.
4) Original sanction letter of the financing agency.
5) Formats duly filled in the pro forma prescribed together with the check memo (10)
6) Copy of the loan ledger maintained by the financing agency duly attested by the Branch Manager.
7) Copy of the S.S.I registration certificate.
8) Caste Certificate in case of Reserved category.
9) Photographs of the work-shed and Machinery if installed duly attested by the District Officer of the Board
10) Physical verification report of the District Officer
24 When should the Margin Money be claimed from the Board
The Margin Money application shall be sent to the District Officer of the Board within 15 days from the date of release of 1st installment by the Bank
25 What are the significant features of the Schemes?
a) The applicant need not waste his time and energy in arranging for sponsoring his application
b) The quantum of monetary benefit in terms of Margin Money is the highest grant comparable with any such schemes in force
c) It is a banker-friendly and borrower-friendly scheme
26 What about Marketing?
For the sale of KVI products manufactured by the Units financed under the scheme, sales outlets can be opened in the rural areas for which Margin Money applicable to production units will be released. Per capita investment criteria shall also be fulfilled.