Chief Minister's Micro Finance Initiative
Category: Banking,Financial Services and Insurance
Level: State | State: Nagaland

Details:
The “Chief Minister&#39;s Micro Finance Initiative (CMMFI)” was launched by the Department of Finance, Government of Nagaland, aims to promote access to credit for economic activities undertaken by individual farmers, entrepreneurs, Self-Help Groups (SHGs), and Farmer Producer Organizations (FPOs). The scheme will have the following components:

  - Provide for interest subvention or subsidy for credit extended by banks to new borrowers under the category of Self-Help Groups, Farmer Producer Organizations, and Individuals for identified activities.
  - Provide for additional interest subvention, over and above what is already provided in existing central government schemes, to make credit more attractive and affordable.
  - Provide collateral-free credit access to Entrepreneurs for Micro and Small Enterprises. Beneficiaries seeking non-subsidy linked loans and fresh beneficiaries seeking subsidy-linked loans.

***Objectives of the Scheme:***

  - To increase farmers&#39; income by increasing investment in the sector, quality inputs, and technology.
  - To promote investment in Agri &amp; Allied and in the small enterprise sectors.
  - To promote credit discipline and encourage the Banking Sector to support Agricultural and small enterprise sectors in the State.
  - To improve the Agri-marketing network and infrastructure in the State.
  - To promote private enterprise.
  - To provide collateral-free credit access to aspiring entrepreneurs.

***Scheme Implementing Agencies:***
**1. At the State HQ Level**
•	Nodal Department shall be the Finance Department.
•	Department of Agriculture, Horticulture, Veterinary and Animal Husbandry, Fisheries, Industries &amp; Commerce, Nagaland State Rural Livelihood Mission, and Investment &amp; Development Authority of Nagaland shall provide the necessary technical support.
***2. At the District Level***
•	District Level Implementation cum Monitoring Committee (DLIMC) headed by the Deputy Commissioner.
•	Participating Banks.
***Salient Features of the Scheme:***
The proposed Scheme is a bank credit-linked subsidy scheme to be implemented in a time-bound manner with participation from various stakeholders - government, bankers, farmers, and entrepreneurs. Broad features of the scheme are:

  - All banks, including the Nagaland Cooperative Banks, will be eligible and shall be encouraged to participate in the Scheme.
  - There will be a district-wise allocation, which will be decided by a State Level Committee headed by the Chief Secretary. This will help avoid skewed distribution of projects regionally.
  - Equal emphasis will be given to all projects, with focus on bankability rather than a particular trade/activity.
  - The borrowers under the scheme will be monitored at the district level by an Implementation Committee headed by the Deputy Commissioner, with members drawn from the various departments. Extension of support to the beneficiaries will be provided by the respective departments. The scheme will involve active participation of the banks and the district machinery to transfer the benefits of the subsidy assistance while creating sustainable livelihoods.
  - The application will be scrutinized by the concerned Bank Branch, and where required, the technical inputs from Nodal Department may be sought for finalizing the beneficiaries seeking capital-subsidy, that too only in cases where loan amount is above 10 Lakhs. For all other categories of beneficiaries, banks shall do the due diligence.
  - The banks shall disburse the entire approved loan and subsidy. The subsidy shall be back-ended and disbursed through the banks. The controlling office or the nodal bank of the financing bank shall submit the claims immediately after release of the first installment of the loan.
  - The details of the eligibility criteria, pattern of assistance, the procedures to be adopted, and the framework of guidelines for implementing the scheme shall be as laid down in this scheme.

Benefits:
Funding Pattern and Subsidy Support
Financing through Banks
•	All banks in the State of Nagaland will be eligible as lending institutions in the Scheme.
•	All participating banks must develop product codes for the Scheme.
•	The quantum of loan, subsidy, and borrower's margin will be as follows:
Sl. No.
Particulars
Share in Project Cost
1
Beneficiary
Minimum 10%
2
Bank Finance
Maximum 60%
3
Back-ended Subsidy from Government of Nagaland
Fixed at 30%
In addition to the above, the State Government will provide interest subvention of an additional 4% for fresh KCC loans and credit linkage to NSRLM SHGs, over and above the 3% provided by GOI. Loans approved under CMMFI shall not be treated as KCC for the purpose of interest subvention as a 6-month moratorium period is already there.
In case of KCC loan and agriculture infrastructure loans, proposed for subsidy under CMMFI, for loans above 1.6 Lakh, respective VDBs may undertake to provide Credit Guarantee Fund from their fixed deposits. In case of NSRLM SHGs, respective Cluster/Block Level Federations may undertake to provide Credit Guarantee Fund from their Community Investment Support Fund. Bank loan for KCC will be determined as per the scale of finance published by NABARD. Bank loan to NSRLM SHGs will be determined as per NRLM/NSRLM guidelines depending on the corpus fund and savings of the SHGs. The applicant may furnish a personal guarantee or guarantee of a salaried employee in lieu of VDB guarantee.
In case of Micro and Small Enterprise loans, loans are mandated to be collateral-free up to 10 Lakh for individual borrowers. Beneficiary seeking loans up to 10 Lakh and above will have the option to seek collateral-free loan through the CGTMSE Scheme, wherein the Government of Nagaland shall pay the Annual Guarantee Fee of 0.37% on behalf of the beneficiary.
The commitment from the State Government shall be in the form of:
Additional Interest Subvention of 4% on KCC loans.
Subsidy of 30% on Term Loans for Agricultural-Allied activities, Entrepreneurship, and other activities.
Coverage of Annual Guarantee Fee of 0.37% for small and medium enterprise loans under the subsidy category or loans up to 50 lakhs for non-subsidy category.
Payment of Interest during the Moratorium. The moratorium shall be uniform across all projects for a period of 6 months.
The tenure of the loan will be fixed for a maximum of 5 years, extendable to 7 years or more at the discretion of the banks.
Two years lock-in period before foreclosure of the loan to prevent the loan from being claimed only for the purpose of the subsidy component rather than actual entrepreneurship/livelihood projects.
All livestock (cows, sheep, chickens, pigs, etc.) loans shall be mandatory to obtain livestock insurance, and this component shall be part of the DPR and loan approval process, wherever insurance coverage is available.

Eligibility Criteria:
&gt; ***Eligible Beneficiaries***

***A. Individual Farmers and Entrepreneurs:*** Individuals who are keen to invest in Agri-allied activities, Entrepreneurs, and other activities for a better livelihood would be assisted as per the norms of the Scheme.
**Eligibility Criteria**

   1. They should not be defaulters to any bank.
   1. They should not be serving Government Employees.
   1. They should have sufficient land for land-based activity in the name of the borrower or on lease with a remaining period of the lease agreement not less than the tenure of the loan. In the case of non-cadastral areas, a document issued by the concerned Village Council and countersigned by the area administrative officer certifying the land-holding shall be sufficient for the purpose.
   1. They should generally have adequate experience or training in respect of the activity for which they seek assistance.

***B. Self Help Groups (SHGs):********* SHGs have been a key element of credit extension to the poor and small entrepreneurs. They undertake activities in a group mode which benefit the community as well as provide meaningful livelihood opportunities to the members. SHGs have been supported under various programs being implemented in the State. The Government of Nagaland endeavors to further support the SHGs through this scheme to expand the scope of economic activities that can supplement the needs, especially of the rural household.
**Eligibility Criteria**

   1. All SHGs (including non-NSRLM SHGs) fulfilling the Panchasutra concept i.e., holding regular meetings; regular savings; regular inter-loaning; timely repayment; and up-to-date books of accounts shall be considered for assistance under the Scheme.
   1. SHGs would be financed, primarily, by the bank where they have their Bank Account.
   1. SHGs shall be graded on the basis of the “Panchsutra” concept.
   1. The group members should have sufficient land, either self-owned or on lease, to carry out land-based activities.

***C. Farmer Producer Organizations (FPOs)******:*** Farmer Producer Organizations are Farmers’ Collectives with characteristics of legal personality and limited liability similar to a company, can attract investments, modern technology, catalyze aggregating and marketing of bulk produce to fetch better remuneration and in turn lead to improved means of production. Although very few in number at present, in the state, they present huge opportunities and have been considered as eligible entities under the scheme.
**Eligibility Criteria**

   1. The FPO should have been registered and should have at least three years of Audited Balance Sheet.
   1. Board members of FPOs and all members should be non-defaulters to any bank/financial institutions.
   1. The FPO should not be in losses.
   1. The FPO should have at least 100 shareholders and a minimum paid-up capital of Rs 1,00,000.
   1. The activity should be relevant to the prime activity of the FPO.
   1. The maximum borrowing of the FPO should be restricted to 2/3rd of their paid-up share capital or as per the borrowing power of their bye-laws.
   1. At least 80% members should be participating in and benefitted by the FPO either through supply of input or aggregation of produce and marketing.

&gt; **Eligible Lending Institutions**

As the subsidy is credit-linked, the projects will be eligible for subsidy only if financed by either a commercial bank (Public &amp;amp; Private Sector Banks), the Nagaland Rural Bank, or the Nagaland State Cooperative Bank.