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SEP -
OPERATIONAL GUIDELINES
The operational
guidelines of the Self Employment Program (SEP) component of NULM are as under
:
Introduction:
This component
focuses on financial assistance to individuals/groups of the urban poor. The component will also support SHGs of
urban poor to access easy credit from banks and avail interest subsidy. The
component will further focus on technology, marketing and other support
services. The component will facilitate issuance of credit cards for working
capital requirement of the entrepreneurs.
The
underemployed and unemployed urban poor will be encouraged to set up small
enterprises relating to manufacturing, servicing and petty business. Local
skills and local crafts should be particularly encouraged.
The percentage
of women beneficiaries under SEP shall not be less than 30 %. SCs and STs must
be benefited to the extent of the proportion of their strength in the city/town
population of poor. A 3 percent reservation should be made for the
differently-abled. At least 15% of the targets shall be earmarked for the
minority communities.
Selection of
Beneficiary:
The
Community Organizers (COs) and professionals from Urban Local Body (ULB)
will identify the prospective beneficiaries. The community structures formed
viz. SHGs and Area Level Federations (ALFs) may also refer prospective
individual and group entrepreneurs. The beneficiaries may directly approach ULB
or its representatives for assistance. Banks may also identify prospective
beneficiaries at their end, and send such cases directly to ULB.
Educational
Qualifications and Training Requirement: No minimum educational
qualification is required for prospective beneficiaries under this component.
However, where special skills are required, appropriate training must be
provided before extending financial support by linking for training under Component
3: Employment through Skills Training and Placement (EST&P). Financial
assistance should be extended only after the prospective beneficiary has
acquired required skills for running the proposed micro-enterprise.
Such training
may not be necessary if the beneficiary has already undergone similar training
provided requisite certificate is produced. In case the beneficiary has
acquired the requisite skills from family occupation such cases should be
certified by the ULB before extending financial assistance.
Entrepreneurship
Development Program (EDP): In addition to skill training of the
beneficiaries, the ULB will also arrange to conduct Entrepreneurship
Development Program for 3-7 days which will cover basics of entrepreneurship
development such as management of an enterprise, basic accounting, financial
management, marketing, backward and forward linkages, legal procedures, costing
and revenue etc. In addition to above topics the module should also include
group dynamics, allocation of work, profit sharing mechanism etc. for group
enterprises.
The EDP module
may be developed by SULM supported by SMMU with assistance of an empaneled
institution/ and the same may be utilized for conducting training program by
the ULB. This training may be arranged through institutions such as RSETI,
reputed institutions engaged in entrepreneurship development/ training,
management/ educational institutes, reputed NGOs engaged in entrepreneurship
development/ training etc.
Any
cost incurred on training of beneficiaries under this component is to be met
out of EST&P component budget.
Pattern of
Financial Assistance: The financial assistance will be in the
form of Interest subsidy. The difference between 7% p.a. and the
prevailing rate of interest will be provided to banks under NULM.
All banks on the
CBS platform would be eligible for interest subvention.
After
disbursement, the concerned bank will send details of the loan and interest
subsidy to ULB.
The settlement
of claims would be done on a quarterly basis, however the submission of claims
should be monthly.
SLBCs have the
option of evolving any alternative procedure of sanction of claims in
consultation with the state government.
The claims
should not be pending for more than a quarter. If the claims are not settled within
6 months, SLBC may stop the scheme temporarily. In such cases, the settlement of
claims should given to the Lead District Bank.
Sub-Component
- Individual Enterprises (SEP-I)-Loan & Subsidy
An
urban poor desirous of setting up a micro-enterprise can avail subsidized loan from
any bank. The norms for such loans are:
Age: 18 Years.
Project
Cost (PC):
The Maximum unit Project Cost is Rs 200,000.
Collateral on
Bank Loan:
No collateral required. Only the assets created would be charged. The banks may
approach CGTMSE for availing guarantee cover.
Repayment: From 5 to 7
Years after moratorium of 6-18 months.
Sub-Component -
Group Enterprises (SEP-G) -Loan & Subsidy
SHG or members
of a SHG constituted under NULM or a group of urban poor desirous of setting up
a group enterprise can avail subsidized loans from any bank. The norms for such
loans are as follows:
Eligibility:
The
group should have minimum 5 members with a minimum of 70% members of
urban poor families. The application should preferably be referred by the
community structures viz: SHG/ ALF formed under NULM.
Age:
All
members of the group should have attained an age of 18 years.
Project
Cost (PC): The
Maximum unit Project Cost is Rs 10,00,000.
Loan: Project Cost
less the beneficiary contribution would be made available as loans.
Collateral
Guarantee on Bank Loan: No collateral/ guarantee required. Only the
assets created would be charged. The banks may approach CGTMSE.
Repayment: From 5 to 7
Years after moratorium of 6- 18 months.
The application
for loans will be sponsored by the Urban Local Body (ULB) which will be the
sponsoring agency.
The ULB will
create awareness regarding SEP to the prospective beneficiaries.
The
beneficiaries can submit an application to the concerned ULB officials on a
plain paper with basic details viz: Name, Age, Contact details, Address,
Aadhaar details (if any), amount of loan required, bank account number (if
available), type of enterprise/ activity, category etc. The intent could also
be sent by mail /post to the ULB office. The ULB shall accept such intents
throughout the year.
The community
structures of NULM viz: SHGs/ ALFs may also refer prospective entrepreneurs for
the purpose of financial assistance under SEP to ULB.
On receipt of
the intent, the respective ULB will enter the details in a register and generate
a waiting list. The ULB will issue an acknowledgement with a unique
registration number, which may be used as a reference number for tracking the
status of an application.
Banks may also
identify beneficiaries and receive the intent letter. Such applications will be
referred by the bank to the ULB.
ULB will call
the beneficiaries in order of the waiting list to complete requisite documentation.
The completed
applications will be sent to the TASK force for scrutiny. The task force will interview
the prospective beneficiaries before recommending or rejecting the application.
They may also call for additional information.
The duly
recommended case will be forwarded to the concerned banks for further
processing which are to be processed within 15 days. Such cases should be
rejected only in exceptional circumstances.
The banks will
send a periodic report to the ULB on the status of the applications received.
Task Force at
ULB Level
A
Task Force may be constituted at the ULB level for recommending cases to banks.
The CEO/ Municipal Commissioner of ULB will constitute the Task Force and be its
Chairman. There could be more than 1 task force depending upon the population.
The indicative composition of the Task Force is as follows:
|
Sr. No
|
TASK Force at ULB level
|
Role
|
|
1
|
Chief Executive
Officer (CEO) ULB/
Municipal Commissioner of ULB/ or any representative authorized by CEO
ULB
|
Chairman
|
|
2
|
Lead District Manager (LDM)
|
Member
|
|
3
|
City Project
Officer (CPO), ULB/
or any authorized representative of ULB
|
Member
Convener
|
|
4.
|
Representative from District
Industries Centre (DIC)
|
Member
|
|
5.
|
Senior Branch
Managers (Max-2) of banks
|
Member
|
|
6
|
Representatives(2) of Area
Level Federation / City Level Federation
|
Member
|
The
applications forwarded to the Task Force by the ULB will be scrutinized and the
eligible applicants would be shortlisted for interview.
The
task force will then recommend the suitable applications, reject the unsuitable
ones or ask for additional information for re-examination.
Linkage with
Credit Guarantee Scheme(CGS) of Ministry MSME
The banks may
approach the Credit Guarantee Fund Trust for availing guarantee cover for SEP
loans.
Progress
Reporting for SEP-I & SEP-G
The ULB will send
a data sheet of the applications recommended by the TASK force along with their
status details to SULM on a monthly basis.
The SULM will
compile all the reports and communicate to M/o HUPA on a monthly basis.
SULM must ensure
that progress under SEP is reviewed in every SLBC and DCC meetings.
Sub-Component -
Interest Subsidy on SHG Loans (SHG-Bank Linkage)
Banks have been
advised to consider lending to SHGs as part of their mainstream credit
operations, both at policy and implementation level.
Master Circular
on SHG-Bank Linkage Program consists of the instructions for SHG bank Linkage.
It includes Opening of Savings Bank Account of SHGs and thereafter
sanction of Loans (varying from a saving to loan ratio of 1:1 to 1:4). In case
of mature SHGs, loans may be given beyond this. The banks should consider such
loans as part of their lending to the weaker sections.
The ULB will do the
necessary groundwork to open bank accounts for SHGs and facilitate access to
Revolving Fund (RF). The ULB may also engage Resource Organization (RO) for the
purpose or may directly facilitate SHGs through its staff.
NULM will
provide interest subsidy for SHGs accessing bank loan. The interest subsidy
will be the difference between the prevailing rate of the bank and 7% per annum.
This difference in interest amount will be reimbursed to banks.
An additional 3
percent interest subvention will be provided to all Women SHGs (WSHGs), who
repay their loan on time. The banks should credit the amount to the accounts
and thereafter seek reimbursement.
The ULB will
facilitate filling of applications for eligible SHGs to access credit and forward
the same to the concerned banks. The ULB will maintain data of loan
applications forwarded to the banks, which will be sent to SULM on a monthly
basis.
The
banks will send the details of disbursed loan cases to ULB along with the details
of interest subsidy. The ULB will check the data and release the subsidy on a
quarterly basis.
The SULM will
monitor and review the progress with banks on a regular basis and co-ordinate
with SLBC for interest subsidy and sensitization of bank staff for financial
inclusion of urban poor.
Identification,
selection, formation and monitoring of SHGs would be the responsibility of state/ULBs
and banks would not be liable for wrong identification.
The criteria for
prompt repayment is as follows:
For Cash Credit
Limit to SHGs:
i.
Outstanding
balance should not be in excess of sanctioned limit/ drawing power continuously
for more than 30 days.
ii.
There
shall be at least one customer induced credit during the month.
iii. Customer induced
Credits during a month should be sufficient to cover the interest debited
during the month.
For
Term Loan to SHGs:
A term loan where all of the EMIs are paid within 30 days of the due date would
be considered as having prompt payment.
Credit
Card for enterprise development
In order to
support the micro-entrepreneurs to meet their working capital and miscellaneous
credit needs, NULM will facilitate access to Credit Cards through banks.
The SULM in
consultation with the SLBC will finalize the norms, limits and specifications
for issuance of credit card. The General Credit Card Scheme (GCC) or any other
variant may be explored by SULM and SLBC.
The ULB will
identify the prospective beneficiaries and will facilitate linkages with banks
for issuance of credit cards. The focus is to initially cover all the
beneficiaries who have availed financial assistance under SEP. Subsequently,
other beneficiaries who are running their own business, but have not availed
assistance under SEP may also be covered.
The targets may
be decided by ULB. The progress is to be aggregated by SULM and communicated to
M/o HUPA periodically.
Technology,
Marketing and Other Support
The City
Livelihoods Centers (CLCs) established under NULM will offer services to the
micro-enterprises such as in the establishment, production, procurement,
technology, processing, marketing, sales, packaging, accounting etc. for long
term sustainability. CLC will also provide support in taking up feasibility/
assessment studies on market demand and market strategy for products and
services of micro-enterprises.
All SEP
individual and group enterprises can avail the services from CLCs. The CLCs
with the support of ULB may also tie up with various other government schemes
which offer services and benefits for micro-enterprise development.
The SULM may
arrange for additional funds/professional assistance for the purpose of
providing the above services to CLCs.
Funding
Pattern
Funding under
this component will be shared between the Centre and the States in the ratio of
75:25. In case of special category States (Arunachal Pradesh, Assam, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Jammu & Kashmir, Himachal
Pradesh and Uttarakhand) this ratio will be 90:10 between the Centre and
States.
The Ministry
will allocate funds to the states on an annual basis based on the targets
assigned. The states in consultation with the respective SLBCs and ULBs will
decide the targets and corresponding funds will be allocated to ULBs. The
applicable interest subvention will be advised by Govt of India/RBI on a yearly
basis.
Monitoring
and Evaluation
The SMMU at the
State level and CMMU at the ULB level will monitor the progress under this
component and undertake, reporting and evaluation. The SULM and the ULB shall
report progress, indicating the cumulative monthly and
quarterly achievement along with key issues in implementation.
To monitor the progress
of achievement, Banks are advised to furnish cumulative quarterly progress
reports to the Joint Secretary, Ministry of Housing & Urban Poverty
Alleviation, latest by the end of next month. Banks are also advised to send a
copy to RBI on email.
States and ULBs
will be required to submit their progress reports online and may also use the
online tool to monitor progress. Key progress reports under SEP will also be
made available in the public domain.
Based on RBI
Circular dt 30/07/15. Please visit www.rbi.org.in for any
further clarification if required….. Poppy
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