Khadi and Village Industries Commission initiated Interest Subsidy Eligibility Certificate (ISEC) in 1977-78 to improve the mechanism of funding. Further, it aims to bridge the gap between the fund requirement and availability (monetary source) by bank fund mobilization. Thus, the Khadi and Village Industries Commission (KVIC) initiative assists to attain the working capital at a subsidized rate.
Role of KVIC in the Interest Subsidy Eligibility Certificate Scheme
KVIC has to procure finance from RBI and also, NABARD to fulfill the capital requirements of the Khadi institutions. Further, implement an appropriate campaign that aids the cause. Additionally, encourage credit rating that will aid in the improvement of the institution.
Salient Features of the Interest Subsidy Eligibility Certificate Scheme
- Depending on the requirements of the institute, a concession is made on the interest rate of the working capital
- The institute will bear only 4% of the interest rate, while the rest is taken care of by KVIC
- Mostly all institutions under KVIC all eligible to avail the benefits of the scheme
- Before the Rural Employment Generation Programme (REGP), all Khadi institutions were under the ISEC scheme
- Consequently, to facilitate the unhindered flow of cash, the government encourages excel support to the association of Khadi and Ployvastra
Structure of ISEC scheme
KVIC monitors the entire ISEC scheme. Further, KVIC’s state and Divisional directors will monitor the bank officers to ensure the proper transaction. Additionally, KVIC requests this scheme to be a common agenda in the State Level Bankers Committee (SLBC).
Eligibility
Acknowledging that the ISEC scheme aims to benefit the Khadi institutions, all institutions are eligible. However, with a certain specification, such as:
- Must possess a Khadi certificate
- Further, enrollment under KVIC
- Besides, the co-operative societies, if they are under the co-operative societies
- Additionally, charitable or religious trusts that assist people are eligible
Financial Assistance
As cited earlier, the beneficiary avails a financial aid by the KVIC (from central government), if and when the interest rate exceeds 4%. Thus, the applicant has to pay only 4% while the rest is taken care of. Further, a concession is offered to these interest rates attained by the applicant.
Applying to avail the Benefits ISEC Scheme
Initially, the Khadi institution will apply for financial assistance from financial banks. However, the application is sided by the KVIC issued ISEC certificate. Following that, is the sanctioning of the capital. Further, depending on the capital, the bank will apply for reimbursement from respective nodal agencies. Nonetheless, the bank can claim for compensation only if the interest rate is over 4%.