Regional Rural Banks-RRB Last Updated : 20 Oct 2019

The Refinance Scheme is a scheme through which collateral free loans are extended towards Persons with Disabilities (PwDs). The Refinance Scheme comes under the Credit Guarantee Scheme (CGS) of the Government of India.
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The Refinance Scheme is a scheme through which collateral free loans are extended towards Persons with Disabilities (PwDs). The Refinance Scheme comes under the Credit Guarantee Scheme (CGS) of the Government of India.

Purpose of the Refinance Scheme for Regional Rural Banks (RRBs)

The main purpose of the Refinance Scheme for Regional Rural Banks (RRBs) is to offer the facility of availing a collateral free loan to Persons with Disabilities (PwDs) for the purpose of higher education or self-employment. The loans are offered through Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and other institutions which are eligible under the Credit Guarantee Scheme (CGS) of the Government of India. The loans are offered at the National Handicapped Finance and Development Corporation (NHFDC) interest rate.

Eligibility Criteria for Public Sector Banks (PSBs), Regional Rural Banks (RRBs) & other Institutions

The eligibility criteria for the Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and other institutions to be enrolled under the Credit Guarantee Scheme or CGS are as follows:

  • The Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and/or other institutions have to be the Member Lending Institution (MLI) of Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
  • The Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and other institutions should have accomplished an Agreement with the National Handicapped Finance and Development Corporation (NHFDC).

Eligibility Criteria for the Beneficiaries opting for the Refinance Scheme

The eligibility criteria for the beneficiaries (with any sort of disability) opting for the Refinance Scheme can be summed up as follows:

  • For the purpose of self-employment:
    • Any citizen of India with a disability of 40% or higher
    • Age of the beneficiary should be 18 years or higher
  • For the purpose of education:
    • Any citizen of India with a disability of 40% or higher

Eligibility Criteria for the Purpose of Taking the Loan

The eligibility criteria for the purpose of taking the loan are as follows:

  • Business activity: If a loan is taken for a business activity, the latter needs to be eligible under the Credit Guarantee Scheme or CGS.
  • Education loan: The eligibility criteria for an education loan will be as per the policy or norms of the National Handicapped Finance and Development Corporation (NHFDC) Education Loan Scheme.

Limit of Loan

  • Loan taken for self-employment purpose: Rs.25 lakh
  • Loan taken for education purpose: Applicable as per the policy or norms of the National Handicapped Finance and Development Corporation (NHFDC) at the time when the application for the loan is processed.

Rate of Interest

The loans can be taken for either self-employment activities or for education purpose. The rate of interest for both the cases are listed below:

  • Self-employment activities:

Rate of interest chargeable for self-employment purpose (for men with disabilities)

Loan quantum (Rs.) Interest to be paid by banks etc. to NHDFC Interest to be paid by the beneficiary to banks etc.
Up to Rs.50,000 2% 5%
More than Rs.50,000 but less than Rs.5 lakh 3% 6%
More than Rs.5 lakh but less than Rs.15 lakh 4% 7%
More than Rs.15 lakh 5% 8%
  • Rate of interest chargeable for self-employment purpose (for women with disabilities)

Under the provisions of the Mahila Samridhi Yojana, women who have disabilities who opt for the refinance scheme are eligible for a special rebate of 1% on the interest payable. The rates of interest for women are as follows:

Loan quantum (Rs.) Interest to be paid by banks etc. to NHDFC Interest to be paid by the beneficiary to banks etc.
Up to Rs.50,000 1% 4%
More than Rs.50,000 but less than Rs.5 lakh 2% 5%
More than Rs.5 lakh but less than Rs.15 lakh 3% 6%
More than Rs.15 lakh 4% 7%
  • Education purpose:

Rate of interest chargeable for education purpose (for men with disabilities)

Loan quantum (Rs.) Interest to be paid by banks etc. to NHDFC Interest to be paid by the beneficiary to banks etc.
Up to Rs.10 lakh for studying in India 1% 4%
Up to Rs.20 lakh for studying abroad 1% 4%
  • Rate of interest chargeable for education purpose (for women with disabilities)

Women with disabilities who opt for the refinance scheme are eligible for an exclusive rebate of 0.5% on the interest payable. The rates of interest for women are as follows:

Loan quantum (Rs.) Interest to be paid by banks etc. to NHDFC Interest to be paid by the beneficiary to banks etc.
Up to Rs.10 lakh for studying in India 0.5% 3.5%
Up to Rs.20 lakh for studying abroad 0.5% 3.5%

Period for Repayment

The period for repayment are as follows:

  • Repayment period for loans taken for self-employment purpose: The period of repayment will be according to the appraisal of the individual proposal made by the Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and/or other institutions. However, it should be acceptable under the Credit Guarantee Scheme or CGS.
  • Repayment period for loans taken for education purpose: Applicable as per the policy or norms of the National Handicapped Finance and Development Corporation (NHFDC) at the time when the application for the loan is processed.

Security

  • Security for self-employment activities: The National Handicapped Finance and Development Corporation (NHFDC) will not take any security from the Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and/or other institutions for the provision of refinancing under the Credit Guarantee Scheme (CGS).
  • Security for education purpose: The National Handicapped Finance and Development Corporation (NHFDC) will not take any security from the Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and/or other institutions for offering refinance under the Credit Guarantee Scheme (CGS). However, the Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and/or other institutions are required to abide by the norms that are recommended by the model scheme of the Indian Bankers Association (IBA). The institutions can also resort to their own norms while issuing loans to beneficiaries.

Patterns of Refinancing

100% refinance of their share will be provided by the National Handicapped Finance and Development Corporation (NHFDC) to the Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and/or other institutions.

Liquidated Damages of Defaulted Payments

Any defaults made while repaying the principal along with interest of the National Handicapped Finance and Development Corporation (NHFDC) dues might be attracting liquidated damages at 2% p.a. The liquidated damage will be counted in addition to the regular rate of interest.

Penal Interest

The loan has to be disbursed by the Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and/or other institutions to the beneficiaries within 90 days from the date of receiving the funds from the National Handicapped Finance and Development Corporation (NHFDC). A interest of 3% p.a. will be charged in addition to the normal rate of interest on the unutilised amount for the next 90 days. Following that, the amount which is not disbursed has to be refunded to the National Handicapped Finance and Development Corporation (NHFDC) by the Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and/or other institutions. An additional penal interest of 2% will be charged till the date of refund.

Incentives to Regional Rural Banks (RRBs) Public Sector Banks (PSBs), and/or other Institutions for Good Recovery

The Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and/or other institutions will be eligible to receive an amount which is equal to 0.50% of the repayment that has been made by them in the past financial year, if they are able to fulfil the criteria which are prescribed by the National Handicapped Finance and Development Corporation (NHFDC).

The eligibility criteria are as follows:

  • At least 95% of the dues payable to the National Handicapped Finance and Development Corporation (NHFDC) should have been repaid by the Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and/or other institutions by 31 March of the past financial year.
  • The recovery percentage of the Regional Rural Banks (RRBs), Public Sector Banks (PSBs), and/or other institutions should have improved by at least 20% as compared to that of the past financial year.

Either of the conditions mentioned above has to be fulfilled by an institution in order to be eligible for the incentives.

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