Govt comes up with new collateral-free loan scheme for rural women entrepreneurs: Report

Credit and Finance for MSMEs: The central government has soft launched a new credit scheme for women in rural areas to boost creation of new enterprises and jobs in villages, as per a report by the Hindustan Times, citing officials. 

The scheme on enterprise financing will allow individual members of a self-help group (SHG) to secure bank credit. As of now, SHG members can avail credit only as groups. 

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Under the scheme, SHG members can get collateral-free loans without any prior experience in entrepreneurship, the report said based on a presentation on the scheme. “The government will give an interest subvention to individual borrowers on loan up to Rs 1.5 lakh for three years on prompt repayment,” the presentation mentioned. The government soft-launched the scheme last week.

Nagendra Nath Sinha, Secretary, Ministry of Rural Development said, “The enterprise financing scheme will create more business opportunities for women. This, in turn, will create more employment in rural belts as the entrepreneurs would need workforce to run their business.” “The scheme will also help in creating additional sources of income for women and diversifying income to give a boost to the rural economy,” Sinha added as per the report. 

As per the guidelines of the scheme, SHG members who have serviced “two cycles of loans or vintage of 24 months” are eligible for credit, the HT report said. Moreover, women entrepreneurs with no prior experience can also procure up to Rs 50,000 credit. For loans up to Rs 2 lakh, members must have two years of experience in their business..

Apart from SHG members, the scheme is also available for proprietorship firms. A government official, cited by HT, said women between 21 and 60 years of age can apply for the scheme. 

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The credit scheme has been framed keeping in mind the post-pandemic financial requirements in the rural economy, said another senior official. 

“The MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) and the union government’s Garib Kalyan Yojana, which provides free food grains, have been extremely helpful for millions of rural poor in this difficult time. But it’s about time that rural households can diversify their income,” the official involved in the enterprise finance scheme said on anonymity.