Stand Up India Scheme: Features, Eligibility, Benefits, Challenges

    The Stand Up India Scheme is a transformative initiative launched by the Indian Government in April 2016. Aimed at promoting entrepreneurship among the Scheduled Castes, Scheduled Tribes, and women, it offers loans ranging from Rs.10 lakhs to Rs.1 crore.

    The scheme is designed to foster entrepreneurial projects, with each bank branch facilitating two projects on average. Stand Up India is not just about financial assistance but also about providing comprehensive support for pre-loan training, marketing, and more.

    Objectives of the Stand Up India Scheme

    • To promote entrepreneurship among the Scheduled Castes, Scheduled Tribes, and women by providing loans for setting up new enterprises.
    • To ensure that each bank branch facilitates at least two entrepreneurial projects, one for SC/ST and one for a woman entrepreneur.
    • To provide a RuPay debit card for the withdrawal of credit and maintain the borrower’s credit history.
    • To establish a refinance window through the Small Industries Development Bank of India (SIDBI) with an initial amount of Rs.10,000 crore.
    • To create a corpus of Rs.5000 crore for credit guarantee through NCGTC.
    • To offer comprehensive support for pre-loan training, factoring, marketing, etc., thereby supporting the borrowers throughout their entrepreneurial journey.
    • To benefit the institutional credit structure by reaching out to the minority sections of the population and initiating bank loans in the non-farm sector.
    • To integrate with other ongoing schemes of different Departments, thereby creating a holistic ecosystem for entrepreneurship.

    Eligibility Criteria of Stand Up India Scheme

    • The applicant must be 18 years or above.
    • The business entity should be a private limited company, LLP, or a partnership firm.
    • The turnover of the firm must not exceed 25 crores.
    • The entrepreneur should either be a woman or a person belonging to the Scheduled Caste or Scheduled Tribe category.
    • The loan will only be provided to fund greenfield projects, i.e., the project must be the first one being undertaken in the manufacturing or service sector.
    • The applicant must not be a defaulter with any bank or other organization.
    • The company should be dealing with commercial or innovative consumer goods. Approval from the Department for Promotion of Industry and Internal Trade (DIPP) is also required.

    Nature and Purpose of the Loan

    Under the Stand-Up India Scheme, a composite loan is provided between ₹10 lakh and ₹100 lahks. This loan includes both term loans and working capital. The purpose of the loan is to set up a new enterprise in the manufacturing, services, trading, or agri-allied activities sector by SC/ST/Women entrepreneurs.

    Size of Loan and Interest Rate

    The composite loan covers 85% of the project cost, including term loan and working capital. The interest rate is the lowest applicable rate of the bank for that category, not exceeding (base rate (MCLR) + 3%+ tenor premium).

    Security and Repayment

    The loan may be secured by collateral security or guarantee of Credit Guarantee Fund Scheme for Stand-Up India Loans (CGFSIL). The loan is repayable in 7 years with a maximum moratorium period of 18 months.

    Working Capital and Margin Money

    Working capital up to ₹10 lakhs may be sanctioned by way of overdraft with a Rupay debit card issued for the borrower’s convenience. The scheme envisages 15% margin money, with the borrower required to bring in a minimum of 10% of the project cost as their own contribution.

    Operation of the Stand Up India Scheme

    The Stand Up India Scheme is operated by all the branches of Scheduled Commercial Banks in India.

    Benefits of the Stand Up India Scheme

    • The scheme aims to encourage and motivate new entrepreneurs, thereby minimizing unemployment.
    • It provides a platform for investors to get professional advice, knowledge about laws, and assistance during the initial two years of their work.
    • Post-set-up aid is provided to the consultants.
    • The scheme offers a relaxed repayment schedule over a span of seven years, reducing the stress of repayment for the borrowers.
    • It helps to eradicate legal, operational, and other institutional obstacles for entrepreneurs.
    • The scheme can act as a driving force for other Government schemes like ‘Skill India’ and ‘Make in India’.
    • It leads to the financial and social inclusion of these strata of society through access to bank accounts and technological education.

    Challenges of the Stand Up India Scheme

    • There is a lack of education about the socio-economic dimensions of Dalit entrepreneurship and women entrepreneurship, which could affect the effectiveness of the scheme.
    • The criteria for the scheme require the company to be innovative, which is left to the discretion of the DIPP. This could lead to delays and potential loss of good entrepreneurial ventures.
    • The company is required to have a turnover of 25 crores, a criterion that few women-led entrepreneurs and SC/ST-led firms meet.
    • The banking sector has not yet penetrated the hinterlands in a meaningful manner, leading to challenges of lack of institutional bank linkages, awareness among the people, the digital divide, and other technical challenges.
    • The funding support of about 10 lakhs to 1 crore is inadequate for the manufacturing sector.
    • The SC/STs and women have not been fully and meaningfully empowered in terms of tech-know-how access to skilled labour, knowledge about the sectors, and so on.
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