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

The Bank Credit Facilitation Scheme provides loans to different MSMEs in India. Read to know about bank credit facilitation scheme in detail.

20 Dec,2022 10:18 IST 21 Views
Bank Credit Facilitation Scheme – Types Of Loans, How To Apply For Bank Credit Facility?

The micro, small and medium enterprises (MSME) form the backbone of the Indian economy as it has nearly 6.33 crore business units, providing employment to about 12 crore people. Hence, the government makes an all-out effort to ensure sustainability of the sector that hinges on smooth availability of funds. There are various government schemes through which MSMEs can avail funds, including the Bank Credit Facilitation Scheme.

National Small Industries Corporation, or NSIC, is a government agency that helps MSMEs avail loans from banks and other financial institutions through the Bank Credit Facilitation Scheme. NSIC assists applicants in filling up the forms and compiling the necessary documents.

Bank Credit Facilitation Scheme

The primary objective of the scheme is to enable MSMEs to have access to credit from banks. Along with arranging for credit support, NSIC offers handholding support relating to the submission of the loan application and follow up with the banks.

Types Of Loans Under The Scheme

An applicant can avail of various types of loan under the Bank Credit Facilitation Scheme:

Term Loans:

These loans allow MSMEs to seek business finance to acquire assets and equipment and set up the required infrastructure. Term loans usually have a tenure of one to 10 years but can go up to 30 years, depending upon 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 allows business owners to acquire financial assistance from a lender. The service includes opening 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:

This is 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, and discounting facilities.

How To Apply For Bank Credit Facility

An MSME needs to approach an officer of an NSIC branch and submit a loan application at a bank which has a tie-up with NSIC or a bank registered under this scheme. The NSIC branch officer helps the person throughout the application process and helps the applicant get the correct documentation required.

The documents to be submitted by the MSMEs must be as per the checklist provided by the banks. It is mandatory for an applicant to have or open an operative bank account with KYC completed. Alternatively, an applicant can download the application form from the official website of NSIC, fill it and submit to a delegated officer.

The steps to apply for a bank credit facility are as follows:
Step 1: Visit the official website of the National Small Industries Corporation.
Step 2: Download the credit application form and take a printout.
Step 3: Fill out the form with the correct information and attach the required documents.
Step 4: Take the filled-out application form to a delegated officer for submission.


Those who have queued up in banks to get their loans approved would know how paper-driven the task is. To add to it, there is usually little assistance from banks on documentation that are essential for loans. The scheme would go a long way in helping the MSMEs not well versed with the lengthy paperwork in navigating the banking process.

The MSMEs must make best use of this facility. They must also carefully assess their credit requirement and then apply for a loan that suits their need.

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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