The Scheme is called Swarojgar Credit Card Scheme (SCC Scheme )

Objectives

SCC Scheme aims at providing adequate and timely credit i.e. working capital of block capital or both to small artisans, handloom weavers, service sector, fishermen, self employed persons, rickshaw owners, other micro-entrepreneurs , etc from the banking system in a flexible, hassle free and cost effective manner. The facility may also include a reasonable component for consumption needs.

Participating banks

The Scheme is to be implemented by all Commercial Banks, RRBs State Cooperative Banks DCCBs / PACS, SCARDBs/ PCARDBs and Scheduled Primary Cooperative banks. The banks will have to actively market the scheme to the eligible clientlele. 

Nature of financial accommodation

 The credit facility extended under the Scheme is in the nature of a composite loan including term loan/ revolving cash credit.

Sanction of term loan / Fixation of working capital limit

• The term loan will be provided for meeting the investment requirements and it will be repaid within five years in suitable installments.
• The Revolving cash credit will be fixed taking into account the operating cycle/nature of the investment and shall be fixed based on available balance after sanction of term loan.

Quantum of limit

 Rs. 25,000/- per borrower as composite loan. The initial investment in fixed assets and /or working capital requirement/recurring expenditure of the borrower are to be taken as the base for fixing the limit. The working capital/ recurring expenditure limit may be in the form of a revolving cash credit and fixed as percentage of the turnover divided by the turnover of operating cycles per annum. A component for consumption credit could be built in keeping in view the value of the family labour in the productive activity. The total limit would have a relationship with the projected net earning and the repayment capacity of the borrower.

Validity

 SCC is normally valid for 5 years subject to satisfactory operation of the account and turnover on a yearly basis through simple review process. The operation in the account should be regular.

Issue of cards

• The beneficiaries under the scheme will be issued with a laminated credit card and a pass book as per specimen enclosed (Appendix). This will serve as an identity card as well as facilitate recording of the transactions on an ongoing basis. The pass book would contain the repayment schedule of the term loan also. A passport size photograph of the holder will be affixed on the card at the space provided for. The card holder would be required to produce the card and pass book whenever he/she withdraws cash from the account.
• Self Help Groups (SHGs) can also be issued cards in their name and they will be liable jointly and severally for repayment.
• As far as possible cluster approach will be followed in implementing the scheme.
• Fees towards issue of card/processing may not exceed Rs. 50/-

Renewal of Working Capital Limits

• Limits will be renewed annually based on the amount credited to the cash credit Account and the repayment performance in the term loan account.
• Under the Scheme, term loan component could be enhanced within the overall limit in case of need subject to satisfactory repayment performance of the borrower.
• The Revolving cash credit to the extent of working capital repaid may be renewed within the overall ceiling of Rs. 25,000/- and it should be normally repaid within 12 months from the date of drawl, however, the minimum discipline expected is that applicable to cash credit accounts. Where necessary, the working capital component could be enhanced within the overall ceiling to provide for escalation in the cost of inputs, etc subject to satisfactory repayment performance.
• Withdrawal will be permitted if revolving cash credit remains outstanding for more than 12 months.
• The aggregate credits in the account during the 12 months period should normally be equal to the maximum outstanding in the working capital component plus the installment of the term loan availed of, if any.

Operation of the Scheme

• The banks will have absolute freedom to select the clients for the card. There will be no subsidy from the Government under this Scheme.
• The borrower can avail the credit facility as per his/her requirements i.e. other term loan or working capital loan or a combination of both.
• The beneficiaries under the Scheme are to be issued with a laminated credit card and a passbook incorporating the name, address, borrowing limit, validity etc. which will serve both as an identity card as well as facilitate recording of the transactions on an ongoing basis.
• The issuing branch would maintain the ledger account in respect of each SCC account holder. The term loan component and working capital component will be accounted for separately. The banks in the account will be generally through the card issuing branch. However, the banks may at their discretion permit operations through the designated branches, taking into account the convenience of the clientele.
• Withdrawal from the account will be through withdrawal slips/cheques. The SCC and Pass Book should be produced each time cash withdrawal is made.
• Opening of SB A/c should not be a prediction for issue of SCC. However , in case SCC holder desires on his/her own to open SB A/c he/she may be allowed to do so.

Insurance

 Beneficiaries under the scheme would automatically be covered under the group insurance scheme and the   premium would be shared by the bank and the borrower  equally. Each bank may negotiate the terms of insurance   with a company of its choice on a national or regional basis.

 Security / Margin / Rate of interest / Prudential norms

 Security, Margin /Rate of interest and Prudential norms are applicable as per RBI / NABARD norms. The interest   rate would not exceed that for comparable farm loans. At present the rate is 9 % per annum. The rate of interest   may be linked to BPLR as per RBI directives. Interest linked incentives may be given for timely repayment. Women   borrowers may be given preference and some concession in the rate of interest. Joint liability groups could be   encouraged as a collateral substitute.

 NABARD refinance

 NABARD refinance will be provided for advances under SCC Scheme to eligible banks against their lendings to the   borrowers in rural areas as per norms under the composite Loan Scheme. 

Monitoring

NABARD being the nodal agency for monitoring the scheme. In order to facilitate close monitoring of the Scheme at the ground level, banks are required to report the monthly progress to the Regional Offices of NABARD concerned in a specified  format.