Interest Subsidy Scheme for SC/ST Entrepreneurs: Get Loans at 4% Interest in Karnataka

The Interest Subsidy Scheme launched by the Government of Karnataka is implemented through the Karnataka State Financial Corporation (KSFC). It aims to provide interest subsidies on loans sanctioned to Scheduled Caste (SC) and Scheduled Tribe (ST) entrepreneurs. The objective is to encourage establishment, expansion, diversification, or modernization of micro, small, or service enterprises owned exclusively by SC/ST individuals.

Benefits

Loan Amount:

• Minimum loan: ₹20 lakhs

• Maximum loan: ₹1,000 lakhs (includes term loan + one-time working capital term loan)

  • Working capital term loan: Max ₹50 lakhs

  • No repetition allowed for working capital term loan

Usage:

• For new unit establishment or expansion/diversification/modernization of existing units

• Can be availed more than once, but total loan capped at ₹1,000 lakhs

Interest Rate:

• Effective rate for beneficiaries: 4%

• Remaining interest above 4% is subsidized by the Government of Karnataka

Repayment Period:

• Up to ₹500 lakhs loan: 8 years (including moratorium)

• ₹500–1,000 lakhs loan: Up to 10 years

Eligibility

• The unit must be 100% owned by SC/ST entrepreneurs (all promoters should belong to SC/ST community)

• Any shareholding by non-SC/ST individuals disqualifies the unit

• Entrepreneurs can be either SCs, STs, or both

• The unit should not have availed interest subsidy under any other GoK/GoI scheme

• The unit must not be in default of loan repayments with KSFC

• Subsidy applies only up to ₹1,000 lakhs of loan; any loan above that will bear standard interest beyond the subsidy

Application Process

Mode: Offline

Steps:

1. Visit the nearest KSFC Branch Office during office hours

2. Collect the application form and fill in the required details

3. Attach all mandatory documents (self-attested if required)

4. Submit the filled form at the branch office

5. Collect the acknowledgment slip with date, time, and reference number

Documents Required

• Passport-size photograph of the applicant

• Caste certificate (Proof of SC/ST status)

• Bio-data and Net Worth statement

• Affidavit (as per prescribed format)

• Audited financial statements (if it’s an expansion project)

• Bank account details for loan processing

• Any other documents as requested by KSFC

Sources And References

• Official Guidelines PDF (SC-ST-E.pdf)

• KSFC Website