Virasat Scheme for Artisans

The National Minorities Development and Finance Corporation (NMDFC) is the apex organisation focussing solely on the welfare of notified minority communities. Its main objective is to lend monetary assistance to minorities for income-generating purposes like small business and self-employment. It extends loans at concessional rates of interest under various schemes and operates through various State Channelizing Agencies (SCAs). The Virasat scheme of the NMDFC aims to provide monetary support to craftspeople and artisans, especially in rural areas.

Objectives of the Scheme

The target beneficiaries of the Virasat credit scheme are minorities engaged in sectors like handloom and handicrafts. With sufficient input, this sector can be exploited to create jobs and encourage entrepreneurship in the villages. As there is a constant demand for such products, it has great economic potential for the development of rural areas but continues to remain underfinanced. Even under NMDFC term loan schemes, artisans and craftsmen generally avail only a small percentage of loans. The Virasat scheme offers focussed financing for craftspeople and artisans to ensure a steady flow of capital. It aims to provide loans at nominal interest rates in order to tackle problems like:

Overdependence on local markets for procuring raw materials and selling finished products
Lack of capital for investment in quality input, modern equipment, the latest technology, marketing, etc.
Meeting capital demands by borrowing from private moneylenders at exorbitant rates of interest
Non-availability of timely credit leading to missing deadlines and future orders
Inefficient methods of production that compromise productivity
Unique products not getting attention in the market due to poor design and packaging

Common Eligibility Criteria

As with all schemes and programmes of the NMDFC, only notified minority communities according to the National Minorities Commission Act 1992 are covered by the Virasat credit scheme. Common eligibility conditions for NMDFC funding are as follows:

Muslim, Buddhist, Christian, Sikh, Parsi and most recently, Jain communities are covered.
- The specific target group for the scheme is:
  - Rural families with an annual income under Rs.98000
  - Urban families with an annual income under Rs.120000

As of 2014, adoption of creamy layer policy also includes families with household income up to Rs.6 lakhs per annum. Women applicants from all the mentioned minority communities will always be given preference.

Specific Eligibility Criteria

Additionally, applicants of Virasat scheme must also satisfy the following conditions:

Applicants must be craftsperson or artisans engaged in either rural or urban areas.
- Craftspeople eligible to be covered under NMDFC Credit Line-1, but with an annual family income limit of
  - 81000 for rural areas
  - 103000 for urban areas
Craftsmen and artisans who participate in NMDFC’s Hunar Haat exhibitions under the USTTAD scheme of the Ministry of Minority Affairs shall be given due preference.

Artisans who are already being supported financially under any concessional credit scheme of the government are not eligible to apply for the Virasat credit scheme.

Purpose and Quantum of Assistance

Under the Virasatscheme, the artisans and craftspeople can avail loans for either of the two purposes.
Working capital requirement for day to day business needs.

- Fixed capital requirement for purchasing tools, equipment or machines for production.
- The maximum amount that can be availed as a loan under the scheme is10 lakhs. The contribution to the loan amount is split among the NMDFC, the respective state channelizing agency, and the applicant itself.
- 90% of the amount will be provided by the NMDFC.
  - Remaining 10% should be provided by the SCA or the applicant with a minimum of 5% contributed by the applicant.

Interest Rates

Artisans will be charged a simple interest of 5% per annum for Virasatscheme loans. The EMI payable every month will be calculated using principal and interest amounts according to bank norms.
Female artisans will further be given concession in the form of 1% discount in interest rate. They will receive the loan at 4% per annum.

The funds for the loans will be routed through the respective SCAs. So, the SCAs will receive the loan at 2% interest from the NMDFC; they will then extend the loan to applicants at interest rates mentioned above.

Security for Virasat Scheme

Loan amount (in rupees)	Securities required
Up to Rs.1 lakh	Self guarantee Post-dated cheques
Between Rs.1 lakh and 5 lakhs	Guarantee from any of the following: employees of the government, any PSU or bank, income taxpayer or public representative Post-dated cheques
Over 5 lakhs	Guarantee from two employees (of government, PSU or bank), income taxpayers or public representatives Landed or immovable property of not under the same value of the loan as collateral Post-dated cheques

Moratorium and Repayment

The SCAs have a duration of three months from date of disbursement from NMDFC as utilisation period for funds received.
For the artisans, the moratorium period is six months when they are meant to set up units and start production. Repayment of interest will start in this period itself.
The repayment period for the principal amount will commence in the next quarter post completion of the moratorium period.
Total repayment period under Virasatcredit scheme for SCA is 8 years.
The repayment period for the artisan borrower is 5 years after the moratorium.

Insurance

The SCAs will tie up with an insurance provider to offer the artisans insurance against death and disability for the duration of the loan.

Application Process

Eligible applicants who wish to avail loan through Virasat scheme may approach the NMDFC by contacting the respective SCA which will usually have offices at district levels. Details of all SCAs is available online at the website http://www.nmdfc.org/index.aspx
Formal application for loans may be made at the district level office.
The SCA is mandated to provide all the information regarding the loan to the artisans.
The SCA will also provide necessary assistance to fill up the application form and submit the relevant documents.
NMDFC has directed its SCAs to use AADHAR numbers while identifying the beneficiaries and link their loan accounts with their AADHAR numbers.
Wherever the facility of AADHAR is not available, the SCAs have also been advised to use any other biometric feature of the beneficiary, to avoid duplication/impersonation and for ensuring greater transparency.
Most of the SCAs have started AADHAR linked financing

Parameters of Virasat Scheme

S. No.	Parameters	Scheme Details
1	Loan Amount	Upto Rs.10 lakhs
2	Rate of Interest for Artisans	5% p.a for male artisans 4% p.a. for female artisans
3	Rate of Interest for SCAs	3% p.a for male artisans 2% p.a. for female artisans
4	Moratorium Period	6 months
5	Repayment Period for Artisans	5 years
6	Repayment Period for SCAs	8 years
7	Means of Financing; NMDFC: SCAs/Artisans	90:10 (with a minimum of 5% from Artisans)
8	Utilisation Period	3 Months