The Interest Subvention Scheme is designed to provide financial support to micro and small manufacturing enterprises and manufacturing-allied activity enterprises in Karnataka. Launched by the Government of Karnataka, the scheme helps eligible enterprises access institutional credit at reasonable interest rates for capital investments. It is implemented through the Karnataka State Financial Corporation (KSFC) and aims to promote industrial growth and economic development.
The scheme covers new and existing profit-making enterprises that avail credit for capital investment in production and expansion activities. The interest subvention provides relief by reducing the effective interest rate for eligible enterprises.
Scheme Key Highlights (Short Summary)
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Loan Amount:
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Minimum loan: ₹5.00 lakhs
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Maximum loan for micro and small manufacturing enterprises: ₹500.00 lakhs
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Maximum loan for manufacturing and allied services: ₹200.00 lakhs
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Interest Rate:
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Subvention of 5.5% on the interest rate for a maximum period of 5 years from the date of loan disbursement.
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Eligibility Criteria:
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Profit-making micro and small enterprises
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Manufacturing enterprises (including manufacturing-allied services)
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Enterprises involved in eligible sectors like Agro & Food Processing, Textile, Automobiles, IT, etc.
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Benefits
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Subvention Period: The interest subsidy is available for a maximum period of 5 years from the first disbursement of the loan.
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Interest Subvention: 5.5% per annum, which is reimbursed by the Government of Karnataka to the enterprise, reducing the interest burden.
Eligibility
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The applicant must be a micro or small manufacturing enterprise.
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The unit must be involved in manufacturing activities or manufacturing-allied services.
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The applicant must avail loans from nationalized banks, scheduled banks, or financial institutions.
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Eligibility for new investments: The subsidy is applicable to new enterprises and existing enterprises for expansion, diversification, modernization, and technology up-gradation.
Exclusions
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Enterprises/activities not eligible:
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Enterprises in trading activities or service sectors (like malls, hotels, transport, etc.).
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Enterprises that have already availed the interest subsidy under other state or central government schemes.
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Infrastructure projects, commercial real estate, etc., are not eligible for this scheme.
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Refinancing or takeover of loans from other banks/financial institutions is excluded.
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Application Process
Offline
Step 1:
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Visit the Branch Office of KSFC during office hours to request the prescribed application form.
Step 2:
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Fill in all the mandatory fields of the application form and attach the required documents (self-attested, if necessary).
Step 3:
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Submit the completed application form along with the documents to the KSFC Branch Office.
Step 4:
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Request a receipt/acknowledgment from the office confirming the submission with relevant details (date, time, and unique identification number, if applicable).
Documents Required
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Passport-size photograph
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Registration certificate
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PAN Card
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Audited financial statements (if expanding an existing unit)
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Bank account details (for loan disbursement)
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Any additional documents as specified by KSFC during the loan process.
Frequently Asked Questions (FAQs)
Q: Who is eligible to apply?
A: Micro and small manufacturing enterprises and manufacturing-allied activities enterprises.
Q: For how long is the interest subvention provided?
A: The interest subsidy is available for a maximum period of 5 years from the date of loan disbursement.
Q: Can enterprises that have availed of other subsidies apply?
A: No, enterprises that have already availed interest subsidy under any other scheme are not eligible for this scheme.
Q: What are the eligible uses of the loan under this scheme?
A: The loan can be used for capital investment in manufacturing activities and for expansion, modernization, and technology upgradation.
Q: Are SC/ST and women entrepreneurs eligible?
A: Yes, provided they meet the other eligibility criteria.
Q: Is the purchase of land eligible for the loan?
A: No, land purchase is not eligible under this scheme.
Q: How is the interest subvention reimbursed?
A: The interest subvention is reimbursed by the Government of Karnataka, reducing the effective interest rate paid by the beneficiary.
Q: What happens if I default on the loan repayment?
A: If there is a default in repayment, the beneficiary may lose the benefits of the interest subvention.
Q: Can loans be refinanced under this scheme?
A: No, refinancing or takeover of loans from other financial institutions is excluded from this scheme.
Q: What is the term of the loan repayment?
A: The term of repayment depends on the loan agreement with the financial institution, but interest subvention is provided for 5 years.