Friday, November 13, 2015

National Urban Livelihoods Mission (NULM)


The operational guidelines of the Self Employment Program (SEP) component of NULM are as under :


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.

Procedure for interest subsidy:

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.

Procedure for Sponsoring of Applications:

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
Chief   Executive   Officer   (CEO)   ULB/   Municipal Commissioner of ULB/ or any representative authorized by CEO ULB
Lead District Manager (LDM)
City  Project  Officer  (CPO),  ULB/  or  any  authorized representative of ULB
Member Convener
Representative from District Industries Centre (DIC)
Senior Branch Managers (Max-2) of banks
Representatives(2) of Area Level Federation / City Level Federation
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 for any further clarification if required….. Poppy