Swarojgar Credit Card Scheme

Swarojgar Credit Card Scheme was introduced to provide adequate and timely credit that includes working capital/block capital or both to small artisans, handloom weavers, service sector, fishers, self-employed individuals, rickshaw owners, other micro-entrepreneurs, SHGs etc. in a flexible, hassle-free and cost-effective manner. This article examines in detail the Swarojgar Credit Card Scheme.

Objective of the Scheme

The scheme envisages provisions of credit to small artisans, rickshaw owners, several self-employed individuals etc. as a composite loan including term loan/ revolving cash credit.

Salient Features of the Scheme

The highlights of Swarojgar Credit Card Scheme are as follows.

SCC scheme covers any scheme/ project that is income generating or generates employment.
The scheme includes a reasonable component for consumption needs.
Farm sector activities like fisheries, dairy etc. are also covered under the scheme. Generally, self-employment activities that have regular turn over/ income stream on a short interval basis are also covered under the SCC scheme.
SCC is s credit delivery mode, and its coverage does not make a unit ineligible for the subsidy. Banks issue SCCs to target borrowers of SCC scheme for disbursing credit under any scheme whether covered under subsidy or not.

Eligibility Standards

The eligibility criteria for the scheme is as follows.

Small artisans, handloom weavers, fisherman, people engaged in self-employment, rickshaw owner, other micro-entrepreneurs etc.
The individuals should not be a defaulter of any bank or Financial Institution.

Types of Loans

The loans types provided by the Swarojgar Credit Card Scheme are

Joint (Composite) loan
Term loan
Revolving fund

Loan Limit

In general, Rs. 25,000 is granted per borrower as a composite loan. Those entrepreneurs borrowing more than Rs. 25,000 can also be covered under the scheme in deserving cases. The initial investment in fixed assets or the working capital requirement/ recurring expenditure of the borrower would be considered as the base for fixing the limit. The working capital/ recurring expenditure limit would be in the form of revolving cash credit and fixed as the percentage of the turn over divided by the total number of operating cycles per annum. The component for consumption credit shall be built in keeping in view the value of the family labour in the productive activity. The total limit would have a relationship with the projected net earning and the repayment capacity of the borrower.

Interest Rate

The interest rate applicable is 11.5% per month. However, this is likely to be changed.

Validity

The offered loan is valid up to five years that is subject to the satisfactory operation of the account, and it is renewed every year using a simple review process. The operations in the account have to be made regularly.

Repayment Period

The repayment period of the loan amount has to through within 12 months, that is one year.

Area of Operation

The scheme applies to all small artisans, handloom weavers, service sector, fisherman, self-employed individuals, rickshaw owners, other micro-entrepreneurs etc. in rural/ semi-urban/ urban/ metro areas. The scheme will be implemented through all branches except the Metropolitan branches.

Assessment of Credit Limit

The term loan will be provided for meeting the investment requirements, and it will be repaid within five years in appropriate instalments.
The revolving cash credit will be fixed into account the operating cycle/ nature of the investment and will be fixed depending on the available balance after the sanction of the term loan.

Margin/ Subsidy

The margin/ subsidy for the scheme is applicable according to the H.O. guidelines. It is not linked with any other subsidy programmes.

Security

The assets that are created out of a bank loan. No collateral would be insisted.

Mode of Operation

The borrower can avail the credit facility as per the requirements that are either term loan, working capital loan or a combination of both.
The beneficiaries eligible under the scheme will be issued a laminated credit card and a passbook mentioning the name, address, borrowing limit, validity etc. that serves both as an identity card and facilitates recording of the transactions on an ongoing basis. Cost of the photograph may be recovered from the borrower.
The issuing branch maintains the ledger account of each SCC Account holder. The term loan component and the working capital component will be accounted for separately. The operations in the account will be usually made though the card issuing branch.
Withdrawal from the account will be made through the withdrawal slips/ cheques. The SCC card and the passbook have to be produced each time the cash withdrawal is made.
The opening of SB account is essential to issue SCC.