Government Sponsored Schemes
Principles & Practices of Banking | Module B · Chapter 40
Chapter 39 covered MSME classification and credit guarantees. This chapter surveys all major government-sponsored credit and livelihood schemes: DAY-NRLM (rural SHGs), DAY-NULM (urban self-employment), PMJDY, PMSBY, APY, MUDRA/PMMY, KVIC, and PMEGP — each with its eligibility, financial parameters, and subsidy structure.
📌 Why This Chapter Matters in JAIIB
Expect 5–7 questions from this chapter. Key focus areas: DAY-NRLM SHG lending norms (CCL min ₹6L, DP = 6× corpus; no collateral ≤₹10L; interest subvention at 7% up to ₹3L); DAY-NULM SEP-I/SEP-G parameters (max ₹2L per person; SEP-G up to ₹10L aggregate; no margin ≤₹50K; repayment 5–7 years); PMJDY overdraft (max ₹10,000; 4× avg balance or 50% credit summations; ≤2% above Base Rate); PMSBY premium and coverage (₹20/year; ₹2L accidental death/full disability; ₹1L partial; age 18–70); APY launch and eligibility (09.05.2015; PFRDA; 18–40; income-tax payers ineligible from Oct 1, 2022); MUDRA tiers (Shishu ≤₹50K; Kishor ₹50K–₹5L; Tarun ₹5L–₹10L; CGFMU cover; no collateral); PMEGP subsidy table (General: 15% urban / 25% rural; Special: 25% / 35%; manufacturing ≤₹50L; service ≤₹20L).
Key Facts & References — Chapter 40 at a Glance
DAY-NRLM — Background, SHG Framework & Lending Norms
Free40.1 Background
National Rural Livelihoods Mission (NRLM) replaced the Swarnjayanti Gram Swarozgar Yojana (SGSY) scheme. It was subsequently renamed Deendayal Antyodaya Yojana — National Rural Livelihoods Mission (DAY-NRLM) with effect from March 29, 2016. Its objectives: (a) promoting poverty reduction through strong institutions of the poor; (b) enabling access to financial and livelihood services; (c) complementing institutional platforms with financial, productive, and market linkage support. Beneficiary composition: 50% SC/STs, 15% minorities, and 3% persons with disability.
40.1.1 Key Features of DAY-NRLM
40.1.3 Financial Assistance to SHGs
Revolving Fund (RF)
Corpus support per SHG: minimum ₹10,000 and maximum ₹15,000. Purpose: build institutional/financial management capacity and credit history.
Community Investment Support Fund (CIF)
Provided in intensive blocks; maintained in perpetuity by Federations. Used to advance loans to SHGs or fund common socio-economic activities.
Interest Subvention
Reduces interest burden to 7% p.a. on all credit from banks/FIs by women SHGs — for a maximum of ₹3,00,000 per SHG.
40.1.5 Lending Norms for SHGs
Eligibility Criteria for Loans to SHG
- ▸Active existence for at least 6 months as per its books of account.
- ▸Qualified as per grading norms fixed by NABARD.
- ▸Practicing Panchasutras (5 disciplines as above).
- ▸Defunct SHGs may be eligible if revived and active for at least 3 months.
Cash Credit Limit (CCL) — Minimum ₹6 lakh for 3 years
| Year | Drawing Power (DP) |
|---|---|
| 1st Year | 6× existing corpus or min ₹1 lakh (whichever is higher) |
| 2nd & 3rd Year | DP enhanced based on repayment performance |
| 3rd Year onwards | Min ₹6 lakh based on Micro Credit Plan (MCP) appraised by Federation/support agency and credit history |
| 4th Year onwards | Above ₹6 lakh based on MCP and credit history |
Purpose of Loan & Income-Generating Portion
| Quantum of Loan | Min. Portion for Income-Generating Purpose |
|---|---|
| Above ₹2 lakh | At least 50% |
| Above ₹4 lakh | At least 75% |
| Above ₹6 lakh | At least 85% |
Security & Collateral
- ▸Up to ₹10 lakh: No collateral, no margin, no lien on savings bank account of SHGs.
- ▸₹10 lakh – ₹20 lakh: No collateral; entire loan eligible for cover under Credit Guarantee Fund for Micro Units (CGFMU).
- ▸Willful defaulters are not to be financed under DAY-NRLM.
- ▸Banks must not deny loans to entire SHG merely because individual members (or their family) are defaulters.
40.1.12 Interest Subvention Scheme for Women SHGs
Select 250 Districts (Category I)
- ▸PSBs/Pvt SBs/SFBs lend to women SHGs in rural areas @ 7% p.a. up to ₹3 lakh.
- ▸All women SHGs eligible for interest subvention on credit up to ₹3 lakh.
- ▸Banks subvented for difference between WAIC and 7% (max 5.5%).
Other Districts (Category II)
- ▸SHGs provided additional 3% subvention on prompt repayment of loans.
- ▸Prompt repayment (CCL): balance ≤ limit with at least one customer-induced credit/month covering interest.
- ▸Prompt repayment (Term Loan): interest and instalments paid within 30 days of due dates.
DAY-NULM — Urban Self-Employment (SEP-I & SEP-G)
Free40.2.1 Background
Swarna Jayanti Shahari Rozgar Yojana (SJSRY) was replaced by National Urban Livelihoods Mission (NULM), which was renamed Deendayal Antyodaya Yojana — National Urban Livelihoods Mission (DAY-NULM) in February 2016. Its Self-Employment Programme (SEP) provides financial assistance (interest subsidy) to urban poor individuals and groups for setting up micro-enterprises. Women beneficiaries ≥ 30%; differently abled 5%; SCs/STs at least proportionate to their share in city population.
40.2.7 SEP-I — Individual Enterprise
40.2.8 SEP-G — Group Enterprise
40.2.5 Interest Subsidy Pattern (DAY-NULM)
- ▸Interest subsidy = interest charged above 7% p.a. (for timely repayment).
- ▸Additional 3% interest subvention for Women SHGs (WSHGs) who repay in time — banks credit this to WSHG accounts, then claim from ULB.
- ▸Claims settled monthly; ULB releases subsidy (difference between 7% and prevailing rate) to banks; must not remain pending beyond one quarter.
- ▸Nodal Bank (designated per state by PSB) transfers amount to beneficiaries via DBT mode.
- ▸Applications processed by bank within 15 days of receipt from ULB Task Force.
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