Unlike the past, when women were confined to households, women of today aspire to grow and make their mark in the world. Even governments have recognised the fact that women are keen on entering male-dominated bastions like entrepreneurship. This is especially true considering the ample number of success stories of women entrepreneurs both in urban and rural India.
In line with this idea, the government of India has created special schemes to encourage women entrepreneurs to set up their enterprises. This blog is an attempt to showcase such women empowerment schemes addressed to the potential women entrepreneurs in India. It is especially meant for women who seek more specific information on government schemes for women empowerment. Following is a list of some of the schemes:
1. Annapurna Scheme
This is for women keen on entering the catering business, and it provides the necessary financial support. It incorporates the following features:
- The loan is offered by the Bharatiya Mahila Bank and State Bank of Mysore.
- Loans up to Rs.50,000 are provided.
- Collateral and guarantor are required to avail of this scheme.
- The loan amount can be used for the purchase of utensils, cutlery, gas connection, refrigerator, mixer, grinder, hot case, water filter, and so on.
- The loan has a grace period of a 1-month before the start of the loan repayment.
- Loans need to be repaid within 3 years in 36 monthly installments.
- Interest rates are influenced by prevailing market rates.
2. Orient Mahila Vikas Yojana Scheme
This is a scheme providing loan for women who are keen on starting their own small business and has the following features:
- The woman must own 51% of the business.
- A 2% concession is offered on the rate of interest.
- The loan is to be repaid in 7 years.
- Collateral is not required for an amount less than 10 lakhs.
- For small scale industries, a loan up to 25 lakhs can be sanctioned without collateral
- The scheme is run by the Oriental Bank of Commerce.
3. Dena Shakti Scheme
This is meant for women entrepreneurs who seek to manufacture goods or enter the domain of agricultural work.
- A loan of up to 20 lakhs can be sanctioned.
- Under the micro-credit category, loans up to Rs.50,000 are sanctioned.
- The woman will be offered a concession of 0.25% on the rate of interest.
4. Udyogini Scheme
This scheme prominently provides low-interest business loans and comes with the following features:
- A maximum of Rs.1 lakh loan can be provided for women between the age group of 18 and 45, provided her family’s annual income is below Rs.45,000.
- No income limits are considered for windowed and disabled women.
- For widowed, differently-abled, and women from backward castes/ tribe categories – a subsidy of 30% of the loan or Rs.10,000 is provided.
- For general category women, a subsidy of 20% of the loan or Rs.7,500 is provided.
- Punjab & Sind Bank started this scheme, and it is now offered by the Karnataka State Women’s Development Corporation (KSWDC).
5. Cent Kalyani Scheme
This is meant for women who run micro or small enterprises like handicrafts, farming, food processing, mobile restaurants, beauty parlor, garment making, and photocopy services. It can also include agriculture and cottage industries. The main features of the scheme include:
- A loan of up to Rs.1 crore can be sanctioned with a margin rate of 20 percent.
- Any collateral or guarantor is not required.
- Banks do not charge a processing fee.
- The scheme was launched by the Central Bank of India.
- Interest rates are influenced by the prevailing market rates.
- Loans have to be repaid within 7 years and come with a moratorium period of 6 months to a maximum of 1 year.
- It is especially meant as a government scheme for housewives.
6. Mudra Yojana Scheme for Women
This specifically provides financial support for women who want to open day-care centres, beauty salons, or a similar venture. In addition, the loan can also be provided to a group of women or a government scheme for women entrepreneurs. The scheme has the following features:
- Loans ranging from Rs.50,000 to Rs.50 Lakhs can be sanctioned.
- No collateral or guarantor is required for a loan amount less than 10 lakhs.
- The woman is required to apply under Shishu, Kishor, or Tarun plans.
- In the Shishu plan – a loan up to Rs.50,000 is sanctioned for initial stage businesses at 12% per annum.
- In the Kishore plan – loans can range between Rs.50,000 to Rs.5 lakhs for well-established businesses with the rate of interest dependent on the credit history of the applicant and the prevailing bank guidelines.
- In the Tarun plan – loans up to 50 lakhs can be sanctioned for expanding a business. The rate of interest depends on bank guidelines and the credit history of the applicant.
7. Bharatiya Mahila Bank Scheme
This scheme is focused on providing finances for underprivileged women who like to start their businesses. Incidentally, Bharatiya Mahila Bank got merged with the State Bank of India in March 2017. The main features of the scheme include:
- Loans up to Rs.20 crores can be sanctioned for manufacturing enterprises led by women.
- Under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), women can avail of collateral-free loans ranging up to Rs.1 crore.
- The loan is to be repaid within 7 years and comes with certain flexibility.
- The base rate of the loan is 10.25%, to which an additional 2% is added to make it 12.25% in total.
- Women entrepreneurs are also offered a 0.25% concession on the interest rate, and it includes a combo of working capital and term loan.
8. Stree Shakti Scheme
To avail of this loan women, have to be enrolled in the Entrepreneurship Development Programmes (EDP) organised by the agency governed by the respective state government. The salient features of the loan include:
- A loan of up to 50 lakhs can be sanctioned.
- If the loan amount exceeds Rs.2 lakhs, a concession of 0.50% on the rate of interest is provided.
- The woman must have 50% ownership in the business to avail of this loan.
- The loan is offered by the State Bank of Mysore.
- No security is required for loans up to Rs. 5 lakhs.
9. Mahila Udyam Nidhi Yojana Scheme
This is a scheme offered by the Punjab National Bank and the Small Industries Development Bank of India (SIDBI). The scheme is offered for women entrepreneurs to set up enterprises in the small-scale sector. The loan also promotes the upgrading and modernisation of existing business projects. Main features include:
- Loans up to Rs.10 Lakhs are sanctioned.
- The woman must repay the loan within 10 years, which can include a moratorium period of a maximum of 5 years.
- Interest rates are influenced by the prevailing market rates.
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Q. Are all the loan schemes backed by the government?
Ans. Yes, all the loan schemes mentioned in the blog are offered by nationalised banks. This makes the loan reliable than the ones offered by private banks. Moreover, there is added degree of trust and flexibility for loan schemes offered by nationalised banks because it comes with the backing of the central government. All these loans are created keeping in mind the evolving stature of women in society. The government fully supports the aspirations of Indian women who are keen on entrepreneurship.
Q. Does the bank ask for prior experience (or family background) in entrepreneurship?
Ans. No, the bank does not seek such clarifications. However, the applicant must have a valid business idea and should have all the means to repay the loan within the stipulated time. If the bank observes that there are limited means to repay the loan, it may reject the loan application in extreme cases. Overall, both the government and the banks seek to encourage women to set up their enterprises. It is the primary reason why exclusive women loan schemes were created in the first place.
Q. What are the chances of loan rejection?
Ans. As mentioned earlier, only in extreme cases does the bank reject a loan application. In most cases, the bank is likely to accept, verify, and disburse the loan amount. Besides this, there are only a limited number of women who come forward to seek such loans. Considering the limited number, the chances of rejection are remote compared to normal business loans offered by the banks. Overall, it is in the interest of the banks to offer women-centric loans and spread positive word-of-mouth.