It may take many more years for the country to witness a woman like Kiran Mazumdar-Shaw, chairman and managing director of Biocon Ltd, the richest woman in India - and perhaps the only successful business woman spoken of in the same breath along with Infosys chief mentor Narayana Murthy or the Wipro group chairman Azim Premji.
In sharp contrast to what Kiran Mazumdar epitomises of womanhood in India, there are not many women with the knowhow to take advantage of specialised loans offered by public sector banks.
State Bank of India deputy general manager Bhaskar Niyogi says the awareness among women about loans to set up small enterprises is extremely low. Such loans are mostly availed of by husband and wife jointly. However, he says things have definitely been changing in 25 years since the time the loan scheme was introduced.
SBI's Stree Shakti package scheme is aimed at supporting entrepreneurship among women by providing certain concessions and it is offered to women in retail trade and business enterprises, and those who are professionals and self-employed. To avail of this loan, to set up an enterprise, a woman seeking the loan will have to invest more than 50 percent of the share capital of the enterprise to be set up.
Niyogi says the Stree Shakti package was recently modified, reducing interest by 0.5 percent. From women in retail trade who pursue loans up to Rs 50,000, the interest charged will be 8.5 per cent, while for loans from Rs 50,000 up to Rs 2 lakh, there is an additional 0.5 per cent charged.
For a loan to start a tiny enterprise with project cost of Rs 5 lakh to Rs 25 lakh, the interest charged is 10.75 percent, while for project cost between Rs 2 lakh and Rs 5 lakh, the interest is 9.7 percent, and for the one below Rs 2 lakh, the rate demanded is 9 percent.
The loan Punjab National Bank provides to women to set up small enterprises is called Mahila Udyam Nidhi scheme. Under this scheme, women can start up new projects in small scale for manufacture, preservation and processing of goods (tiny enterprises include all industrial units and services industries, except road transport operators) satisfying the investment ceiling.
However, projects that avail of any margin money or seed or special capital assistance under any schemes of the Central or the state government, State Financial Corporation, other state-level institutions and banks (except state investment subsidy) are not eligible for assistance under the scheme.
Further, under the scheme, the project cost cannot exceed Rs 10 lakh in case of new projects, including working capital margin and, in case of existing units, for undertaking expansion, diversification and rehabilitation.
PNB provides 25 percent of the project cost with a ceiling of Rs 2.5 lakh per project, while contributors have to pool 10 percent of the project cost. The bank charges about 1 percent of equity assistance service charges.
Within 10 years (including initial moratorium of 5 years), the repayment period of soft loan would be co-terminus with the term loan granted for the project by bank. Non-repayment of soft loan instalments would attract interest as stipulated by Small Industries Development Bank of India.
PNB also enables housewives, in particular, and women, in general, to supplement family income and use their spare time profitably through this scheme by taking up projects as artisans or under village and cottage industries, small-scale industries, small business and retail trade. Under the scheme of financing small-scale industries, bank may also consider industrial projects requiring higher assistance.
The eligibility criteria for this are: the woman or the housewife must aged 18 years or above, must have lived in a place for more than six months, she must not have been a member of any industrial cooperative society and not indebted to any cooperative or state agency.
Further, amount of loan must be need-based, subject to ceiling of Rs 25,000 per borrower for purchase of machinery or equipment etc, and meeting working capital requirement of one operating cycle.
Pledge or hypothecation or mortgage of assets is made out of bank loan. No collateral security or third party guarantee is required. The rate of interest will be 11.50 percent subject to change in market conditions.
The term loan or the composite term loan will be adjusted along with interest in 36 equated monthly instalments after three to six months from the date of availing of the loan, depending upon generation of surplus.
The borrower will be required to open a savings fund account with the bank in which she must deposit once every fortnight net income after spending such amount out of it as needed for meeting the working or the living expenses. She must also maintain such balance in her savings account at the end of each month as this would enable the bank to debit the said account with monthly instalment.
