through Khadi and Village
Industries Commission has introduced Margin Money Scheme
( MMS) in order to create large
employment opportunities in rural
areas of the Country. This scheme is to encourage
establishment of village industries
in the Country by providing
certain fixed amount as
Margin Money. Since 1997, this programme is being implemented through
Nationalised Banks. To supplement the efforts of the Nationalised Banks
and to ensure that the scheme reaches the nook
and corners of the State, this scheme is being now extended to
Co-operative Banks, Private Sector Scheduled Commercial Banks and State
FEATURES OF THE SCHEME :
i) This scheme is applicable for units coming up in rural areas only for establishing village industry projects.
Rural Area means :
Which is classified as ' Village ' under revenue records of the District and includes the area comprised in any town, the population of which does not exceed 20,000 as per 1991 census or such other figure as the Central Government may specify form time to time.
Any industry located in rural area which produces any goods or renders any services with or without the use of power and in which the fixed capital investment per head does not exceed Rs. 50,000/- or such other figure as the Central Government may specify from time to time.
, following industries / activities
classified under " Negative List
" shall not be eligible
for funding under the scheme .
a) Any industry / business connected with meat ( slaughtered), i.e. processing, canning and / or serving items made of it as food, production/ manufacturing.
b) Sale of intoxicant items like beedi / pan / cigar / cigarette etc.,
c) Hotel of dhaba or sales outlet serving liquor.
d) Preparation / producing tobacco as raw materials.
e) Tapping of toddy for sale.
f) Any industry/ business connected with cultivation of crops/ plantation like tea, coffee , rubber etc., sericulture ( Cocoon rearing ).
Activities related to coir, horticulture, floriculture, animal
husbandry like pisciculture,
piggery, poultry etc.,
h) Khadi and Polyvastra and any project producing yarn and cloth.
i) Manufacturing of plastic carry bags of less than 20 microns thickness.
j) Manufacturing of carry bags or containers made of recycled plastics for storing, carrying, dispensing or packaging of food stuff.
k) Any other item which causes environmental problems.
The Banks have to ensure that
the project is viable both technically and economically
and take their own credit decision on the basis of viability of each project.
iii) This scheme is available for individual entrepreneur as well as co- operative societies/
trusts. In case of individual entrepreneur the project cost ceiling limit is fixed at
maximum of Rs.10. lakhs. In case of co-operative societies / trusts the project cost
ceiling limit is fixed at maximum of Rs.25. lakhs.
iv) The project cost consists of two components - Fixed Capital and Working Capital.
a) Workshed ( only in cases where it is very essential )
b) Machinery / Equipment
c) Preliminary & Pre -operative expenses
d) Miscellaneous fixed assets
e) Interest during implementation
f) Deposits ( KEB , Telephone etc.)
note that the financial assistance
should not be extended towards the land cost. The beneficiaries
should be encouraged to start the activities
in their own shed or by acquiring
the shed on rental / lease basis.
cycle of working capital
requirement is also included in the project cost.
v) Banks must ensure investment of " own contribution " of the individual / co-operative society etc., @ 10% of the total cost of the project for general category and 5 % in the case of special category.
Scheduled Caste (SC ) Scheduled Tribe (ST) Other Backward Classes (OBC),
Physically Handicapped (PH) Women, Ex-servicemen, Minority Community beneficiaries.
VI) The Bank will initially sanction total project cost (-) minus own contribution of the beneficiary, i.e., 90% or 95% of the project cost as the case may be and disburse the amount in stages suitably for setting up of the project.
VII) The projects established by the individual beneficiary / entrepreneur are eligible for maximum margin money of RS. 2.50 lakshs in case of general category and Rs.3.00 lakhs in case of special category.
The projects established by co- operative societies/ trusts are eligible
for maximum margin money of Rs.4.00 lakhs. For example:- if the project is
established by general category beneficiaries involving , let us say project
cost of Rs.25.00 laksh, then the margin money is calculated at 25% of the
project cost upto Rs.10.00 lakhs project plus 10% of the project cost for
remaining cost of the project over and above Rs.10.00 lakhs and upto Rs.25.00
lakhs. In case of special category beneficiaries involving, let us say project
cost of Rs.25.00 lakhs, then the margin money is calculated at 30% of the
project upto RS.10.00 lakhs project plus 10% of the project cost for remaining
cost of the project over and above Rs.10.00 lakhs and upto Rs.25.00 lakhs but
maximum limit is fixed at Rs.4.00 lakhs
The margin money scheme is applicable for New village industry
projects only. This scheme is not applicable for expansion/ modernisation
/ diversification of already
existing industry .
Once the margin money is released in favour of the loancee, it should be
kept in term deposit for 2 years at Bank level in the name of the beneficiary
and Bank interest accrued on
such deposit will be utilised to service partial interest burden on the loan
disbursed to the beneficiary.
Since margin money is to be provided in the form of middle- end subsidy (
grant(, it will be credited to the borrower's loan account after 2 years from
the date of first disbursement to the borrower / institution. In case, the
Bank's advance goes " bad" before 2 years period is over, margin money
will be adjusted by the bank to liquidate loan liability of the borrower either
in part or full.
In case any recovery is effected subsequently by the Bank from any source
whatsoever, such recovery will be utilised by the Bank for liquidating their
outstanding dues first. Any surplus thereafter will be remitted to KVIC.
XIII) Margin Money will be one time assistance from KVIC. For any enhancement of credit limit or expansion / modernisation of the project, the KVICs margin kmoney assistance will not be available.
Training has been made compulsory under this scheme. The cost of the training to be included in the cost of the project
In order to enhance quality lending and success rate of the Margin Money Scheme, it is proposed to conduct training programme for the potential entrepreneurs in three stage:
Entrepreneur Awareness Programme
Entrepreneurship Development programme
Skill Development Programe (SDP)
The brief note on each training, programme is given below.
Entrepreneur Awareness Programme (EAP)
This programme is conducted for all the potential entrepreneurs who are willing to establish rural based industries by availing assistance under Margin Money Scheme. This programme is intended to create awareness about Margin Money Scheme and to identify potential entrepreneurs who can be given further intensive training on entrepreneurship. The duration of the programme is one day.
b) Entrepreneurship Development Programme ( EDP)
programme will be conducted for the candidates who have attended EAP and shows
entrepreneurial qualities to establish specific industry. This programme is
intensive in nature and all the inputs necessary for becoming a successful
entrepreneur will be provided in this programme. The duration of the training
programme is for 15 days. and preferably residential
Skill Development Programme ( SDP)
This training programme will be organised for the candidates Completing EDP and further requires Skill Development in the specific field. The duration of the training varies from 7 days to 3 months depending on the requirement of the particular activity .
the above training programmes will
be conducted through established training institutes/
voluntary organisation in Karnataka State. The number of candidates for
each training programme will be decided based on the demand for such
programmes. The State Directorate of KVIC will also be involved in conducting of
above training programmes.
MARKETING SUPPORT : -
The existing network of about 340 khadi Bhandars in Karnataka could the utilised to market the products produced by the village industries on consignment basis. In addition, the Banks are advised to encourage more retail outlets under this scheme itself
KVIB has launched' NISARGA ' brand for marketing of KVI products. The assisted
units under Margin Money scheme can
use this brand for marketing of
HOW TO CLAIM ?
The Co - operative Banks, Private Scheduled Commercial Banks and State Financial Corporation can claim margin money amount on selective basis directly from the Khadi and Village Industries Board with the following documents.
A copy of the certified relevant ledger extracts of the loan account to prove that the total loan has been release to the unit.
filled -in application form as indicated in proforma -1.
Head Office of the Private Sector Scheduled Commercial Banks /
Co-operative Banks / State Financial Corporation has to submit District - wise
quarterly progress report ( as per Proforma-2) to the Khadi and Village
Industries Board, Bangalore and a copy of the report to the directorate of
Economic Research Khadi and Village Industries
Commission Mumbai Such report should be submitted for April- June, July-
September, October- December and
January - March quarters. Such quarterly progress reports should also include
the District - wise monthly statement of margin money claim submitted and claim
INVESTMENTS SUBSIDY :
In addition to the Margin Money, certain activities in some Districts / Taluks are also eligible for investment subsidy on the fixed assets investment as per the New Industrial Policy ( 2001-2006) announced by the State Government. For the purpose of the subsidy the State is categorised into A, B, C & C Zoncs as indicated
CLASSIFICATION OF ZONES
Industry Sector Eligible for subsidy
10% value of fixed assets subject to a max. of R.5 lakshs
20% value of fixed assets subject of a max.of Rs.10 lakshs
As detailed in
Tiny & Small Scale industries, 25% value of fixed assets subject ot a max of Rs.12.50 lakshs.
The Districts/ Taluks covered under each Zone for Investment Subsidy is given in
CERTIFICATE OF REGISTRATION :
The KVIB will issue a Certificate of Registration after due verification of the new unit by the concerned District Officer. This certificate will facilitate the beneficiary to avail various incentives and concession offered by the State and Central Governments. The Certificate of Registration format is enclosed.