ISEC - Interest Subsidy Eligibility Certificate Last Updated : 24 Aug 2019

The Indian Government launched the scheme in May 1977 to help raise capital funds from banks. The main aim of the scheme is to help financial institutions to lend funds to Khadi and Village Industries. Agencies can avail loans under the ISEC scheme at a rate of interest of only 4%, and the difference between the 4% and the actual rate of interest is borne by the Khadi and Village Industries Commission (KVIC) as an interest subsidy.

Industries that are eligible for the Interest Subsidy Eligibility Certificate Scheme

The below-mentioned institutional financing agencies are eligible for the ISEC scheme:

  • Khadi and Village Industries Commission
  • State Khadi and Village Industries Board
  • Registered Institutions
  • Co-operative societies
  • Trusts that are created for public purposes that are charitable or religious in nature.

The scheme is available only for the Khadi and Polyvastra sector.

KVIC’s bank finance cell will issue the Interest Subsidy Eligibility Certificate. Based on the certificate’s strength, the institutions that are eligible under this scheme can negotiate with banks to avail financial assistance. The bank has complete authority to accept or reject any loan to the eligible institution.

Procedure to apply for the ISEC Scheme

The Khadi institutions will have to apply at the financing bank for the working capital. The ISEC that is issued by the KVIC must also be submitted along with the application. Depending on the working capital that has been approved, the claim for reimbursement will be raised by the bank to the nodal branch. for any difference in interest rates above 4%.

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