Interest Subsidy Eligibility Certificate (ISEC) Scheme Interest Subsidy Eligibility Certificate (ISEC) Scheme Interest Subsidy Eligibility Certificate (ISEC) Scheme
Interest subsidy scheme providing concessional credit support to eligible registered Khadi institutions. Interest subsidy scheme providing concessional credit support to eligible registered Khadi institutions.
योजना विवरण
Overview: Interest Subsidy Eligibility Certificate (ISEC) Scheme
A vital financial support mechanism instituted by the Ministry of MSME and administered by the Khadi and Village Industries Commission (KVIC) to bridge budgetary gaps and provide highly concessional working capital bank credit to recognized Khadi institutions.
What is the ISEC Scheme?
The Interest Subsidy Eligibility Certificate (ISEC) Scheme acts as the primary funding lifeline for the traditional Khadi and Polyvastra producing sector. Under this program, enlisted institutions obtain working capital finance from scheduled commercial banks at a subsidized interest rate of just 4% per annum. The remaining margin between 4% and the bank's standard commercial lending rate is reimbursed directly to lending banks as an interest subsidy by the Central Government via KVIC.
Key Scheme Highlights
| Feature | Scheme Policy Provisions |
|---|---|
| Governing Body | Khadi and Village Industries Commission (KVIC) & Ministry of MSME |
| Net Effective Interest Rate | Only 4% p.a. payable by the beneficiary Khadi institution |
| Subsidy Coverage | Difference between bank lending rate and 4% covered by KVIC |
| Purpose of Finance | Working Capital only (Raw materials, artisan wages, stock holding) |
| Eligible Sectors | Khadi and Polyvastra production/marketing institutions |
Key Benefits of the ISEC Scheme
- Extremely Low Borrowing Cost: Khadi producers service working capital debt at a flat concessional rate of 4% per annum, drastically curbing operational overheads.
- Sustained Artisan Livelihood: Ensures unbroken cash flows for rural spinners, weavers, and craftspersons during off-season stock cycles.
- Direct Bank Subsidy Settlement: The differential interest subsidy is credited straight from KVIC to the lending bank, removing claim settlement friction for institutions.
- Flexible Institutional Scaling: Allows Khadi federations and registered societies to ramp up bulk raw cotton/wool procurement without capital constraints.
Eligibility Criteria
- Must be a Khadi Institution registered either with KVIC or a State Khadi and Village Industries Board (KVIB).
- Must hold a valid, active Khadi Certificate issued by KVIC.
- Institution must be affiliated with the production and marketing of authentic Khadi or Polyvastra goods.
- Compliant with statutory annual audits, performance grading, and timely submission of past fund utilization statements.
How to Apply for an ISEC Certificate
- The eligible Khadi institution drafts its working capital assessment and budget estimates for the upcoming financial year.
- Submit the annual assessment proposal to the respective KVIC State / Divisional Office.
- KVIC evaluates the production targets, past track record, and working capital limits to issue the formal ISEC Certificate specifying eligible credit volume.
- Present the sanctioned ISEC Certificate to an authorized Scheduled Commercial Bank or cooperative bank.
- The bank sanctions the working capital limit, bills the beneficiary at 4%, and lodges claims with KVIC for the balance interest subsidy amount.
