Bank Credit Facilitation Scheme – Types Of Loans, How To Apply For A Bank Credit Facility?

The Bank Credit Facilitation Scheme provides loans to various MSMEs in India. Know about bank credit facilitation scheme in detail at IIFL finance.

29 Nov,2022 10:27 IST 2064
Bank Credit Facilitation Scheme – Types Of Loans, How To Apply For A Bank Credit Facility?

Micro, Small and Medium Enterprises are the main economic contributor to the supply chain and provide raw materials to manufacturers. The Indian government is also making numerous efforts to support MSMEs that find it challenging to raise capital owing to their low turnover and lack of valuable assets to pledge as collateral.

A few years ago, numerous MSMEs had to shut their operations as they could not secure business financing. The Indian government took note of these credit problems faced by the MSMEs and requested the National Small Industries Corporation to create a process to mitigate credit issues. Thus, the National Small Industries Corporation launched the Bank Credit Facilitation Scheme.

What Is The Bank Credit Facilitation Scheme?

After analysing the MSME market for potential credit challenges, the National Small Industries Corporation entered into a Memorandum of Understanding with several private and public sector banks to provide the necessary credit facilities. The service where the NSIC aids MSMEs in getting the desired loan from the public and private sector banks is called the Bank Credit Facilitation Scheme.

Such a facility works on par with business loans and provides a loan amount to the MSME with interest. Once the MSME secures business financing through the loan, the MSME is liable to repay the loan amount along with interest to the lending bank within the loan tenure.

The Bank Credit Facilitation Scheme aims to achieve the following objectives:

• To provide loans to various MSMEs in India through different public and private sector banks.
• To allow MSMEs to transfer their bank accounts to another bank or create a new one.
• To aid MSMEs in filling out the loan application form and submitting the required documents.
• To ensure that the MSMEs get affordable and attractive interest rates based on their performance and credit rating.

Types Of Loans Under The Bank Credit Facilitation Scheme

MSMEs can apply for the following types of loans under the bank credit facilitation scheme:

• Term Loans:

These loans allow business owners to seek business finance to acquire assets and equipment and set up the required infrastructure. Term loans usually have a loan tenure of 1-10 years but can go up to 30 years, depending on the loan amount and the interest rate. Term loans are of three types: short-term, medium-term, and long-term.

• Non-Fund-Based Limit:

This credit facility offered under the BCFS allows business owners to acquire financial assistance from a financial institution such as a bank or NBFC. The service includes opening up a credit account with the financial institution from which the business owner can withdraw cash up to the provided limit to fund various business activities.

• Working Capital Limit:

The working capital limit is a service under the BCFS constituted to be a revolving cash credit facility. The financial institution sanctions working capital to the business owner, and they can withdraw a loan amount up to the approved credit limit. Business owners can utilise such facilities as cash credit, overdrafts against book debts, discounting facilities, etc.
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How To Apply For Bank Credit Facility

The steps to apply for a bank credit facility are as follows:

1. Step 1:

Visit the official website of the National Small Industries Corporation

2. Step 2:

Download the credit application form and take a printout.

3. Step 3:

Fill out the form with the correct information and attach the required documents.

4. Step 4:

Take the filled-out application form to a delegated officer for submission.

What Are The Eligibility Criteria For Applying For Bank Loan Facility?

All the registered companies in India are eligible to apply for the credit facility and avail of loans from the included public and private sector banks. However, you should register the business ID with the required authorities and ensure that the Indian government legally recognises the business.

Avail Of An Ideal Business Loan From IIFL Finance

IIFL Finance offers varying financial services, including customised and comprehensive MSME business loans. Such business loans are collateral-free with attractive interest rates and tailor-made for MSMEs with fewer financial needs. You can apply for the loan online by verifying your KYC details or visiting IIFL Finance nearest branch. The loan application is paperless, with only minimal documents needed.


Q.1: Can I get a loan under MSME with IIFL Finance?
Ans: Yes, you can apply for MSME loans if you operate in the MSME category. The rates of interest on MSME loans begin from around 7.65% annually. The loan sanctioned ranges between Rs. 50,000 to a few crores.

Q.2: What is the loan tenure for IIFL Finance business loan?
Ans: The loan tenure for an IIFL business loan up to Rs 30 lakh is five years.

Q.3: Do I need collateral to acquire a business loan from IIFL Finance?
Ans: No, IIFL Finance business loan does not require pledging any asset as collateral to take the business loan.

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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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