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National Small Industries Corporation: Benefitting 2 Lakh MSMEs

Created on 30 Nov 2023

Wraps up in 6 Min

Read by 2.1k people

Updated on 13 Dec 2023

Let’s take the example of Manu, an entrepreneur who is excited about his plans to expand his business in the manufacturing sector for automotive parts. His acquaintance, Ravi, had recently secured funding through a government loan scheme, and Manu, inspired by Ravi's success, decided to explore similar avenues. 🤓

He meticulously studied the eligibility criteria, documentation requirements, and application processes tried by Ravi, determined to secure the necessary funding for his business expansion. However, Manu overlooked a crucial detail – the stark difference between his and Ravi's business sectors, as well as the size of their respective companies. 😥

This ended up costing him a lot of time and energy. He even had to postpone his expansion plan, which messed up the business structure for the next few months. 😮‍💨

To avoid such an occurrence, the Indian government established an organisation dedicated to providing tailored services and schemes to varying enterprises. This scheme stands as a pivotal institution in India's economy and helps businesses achieve their future prospects without financial strain. The institution is NSIC, and the article is a depiction of what it represents.

So, let’s begin our structured research with the most basic yet crucial question…

What is the NSIC Loan Scheme?

The National Small Industries Corporation, aka NSIC, is dedicated to fostering the growth and development of Micro, Small, and Medium Enterprises (MSMEs). NSIC promotes entrepreneurship and supports MSMEs by providing various services, such as credit facilitation, training, and technology support.

NSIC has over 2,76,994 MSME units in its database, with multiple schemes to suit the needs of different businesses. The interest rate applicable to these schemes also differs and is devised between the range of 9-10% per annum. The division of the interest rate is usually similar to the below structure:

SME = Small & Medium Enterprises

Particulars 

Micro

Small & Medium

(i) Units having valid SME 1 rating

9.00

9.50

(ii) Units having valid SME 2 rating

9.50

10.00

(iii) Other units

10.00

10.50

Remember that interest rates are unique for various schemes, so make sure to inquire about any additional charges before making a decision. 🔍

NSIC's Vision and Mission:

NSIC envisions a future where MSMEs drive India's economic growth, driving innovation and contributing to inclusive development. The whole ground frame for its establishment was to function as a go-to financial support for the nation's MSME sector. Its mission is to:

  • Enable MSMEs to achieve their full potential.
  • Promote entrepreneurship and skill development.
  • Enhance innovation and technology adoption.
  • Expand market access and enhance competitiveness.
  • Empower MSMEs to contribute to inclusive development.

Now that the vision of the institution is understood let’s see how NSIC practises it in its services.

Key Functions of NSIC:

  • Credit Facilitation: NSIC acts as a facilitator for MSMEs seeking access to affordable financing. It collaborates with banks and financial institutions to provide loans, working capital, and equipment finance to MSMEs. 💸
  • Training and Skill Development: NSIC provides a comprehensive range of training programs to enhance the skills and competencies of MSMEs. These programs cover various aspects of business management, technology adoption, and quality improvement. 🧑‍💻
  • Technology Support: NSIC promotes technology adoption among MSMEs through various initiatives, such as technology centres, prototyping facilities, and technology parks. It also provides guidance and support in implementing technology solutions. 🖥️
  • Market Development: NSIC assists MSMEs in expanding their market reach and encouraging international trade. It organises trade fairs, exhibitions, and buyer-seller meets to connect MSMEs with potential clients.
  • Cluster Development: NSIC promotes cluster development, which involves fostering collaboration and knowledge sharing among MSMEs within a specific industry or region. This approach helps MSMEs benefit from economies of scale and enhance their competitiveness.

Based on these functions, NSIC consists of several schemes.

NSIC Loan Schemes

Some of the most popular schemes include:

  • Single Point Registration Scheme: It is a centralised registration system that allows MSMEs to register for various government schemes and benefits with a single application. This streamlined process aims to reduce the administrative burden on MSMEs and facilitate their access to government support.
    As per NSIC’s official website, over 63,000 single point registration units have been admitted.  
  • Raw Material Distribution: Procure raw materials at competitive prices. Under the scheme, NSIC enters into bulk purchase agreements with raw material suppliers and then distributes the raw materials to SMEs at negotiated prices.
  • Credit Support: Also known as the "Credit Facilitation Through Bank" scheme, this aims to provide easy access to credit for MSMEs through syndication with various banks. NSIC acts as a facilitator, bridging the gap between MSMEs and banks to streamline the loan application and approval process.
  • Consortia & Tender Marketing: This scheme helps in participating in tenders and securing larger orders. The scheme provides financial assistance to MSMEs to form consortia, develop their capabilities, and market their products and services to large buyers.
  • Technical Service Centres: The scheme aims to enhance the competitiveness of MSMEs by providing them with access to advanced technology, skill development training, and testing facilities.
  • E-Marketing/Digital Services Facilitation: The scheme provides financial support and guidance to MSMEs in areas such as website development, e-commerce solutions, digital marketing, and social media management.

Apart from NSIC, there are a number of loan schemes provided by the government to help businesses, small and medium alike, boost growth. Read the article Government Loan Schemes for Businesses to get an idea of the options available.

If your business falls under one of these categories, then the next step would be to check your eligibility status.

Who is Eligible for NSIC?

To apply for one of the loan schemes provided by NSIC, enterprises should consist the following must-haves:

  • Business Turnover: The business under the MSME category with an annual turnover ranging between ₹5 crore and ₹100 crore are eligible. This particular requirement screens out the large and fresh businesses from the applicants.
  • Business Track Record: The business must have been in successful operation for at least the past three years. This ensures that the applicant has satisfactory information about the sector they arise from, along with much-needed experience. 
  • Credit History: If applicable, the business must have a satisfactory past loan repayment record. The business must have a good CIBIL score.
  • Valid GST Number: The business must be GST registered and should include a valid GST number in their official documentation.

If your business has the above checklists covered, then you are one step closer to  good financial funding. ✅

If you still have doubts about the scheme, then I am sure you would be sold by checking out these staggering…

Benefits of NSIC Loan

  • Lower interest rates: NSIC offers lower interest rates than most private lenders. This can save MSMEs a significant amount of money over the loan’s duration. 💰
  • Longer repayment periods: NSIC loans typically have longer repayment periods than given by other lenders. This can make it easier for MSMEs to manage their cash flow. ⏱️
  • Flexible collateral requirements: NSIC is more flexible than most other lenders when it comes to collateral requirements. This means that MSMEs with lesser assets may still be able to qualify for a loan. 😎
  • Government support: NSIC is a government-backed institution, which means that MSMEs can be confident that they are getting a fair deal. ✅
  • Quick loan processing: NSIC has a streamlined loan application process that can help MSMEs get the funds they need quickly. Remember the Single Point Registration Scheme? Quick and easy! 🤗

The Bottom Line

In this way, the NSIC loan scheme helps the small and medium businesses of the nation, with a few micro enterprises included. The scheme provides financial assistance, guidance, and support to MSMEs, enabling them to navigate their growth accordingly.

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A book-lover who adores everything fictional, Preeti has undertaken the life mission of tasting every flavour available in the pantry. A science student with a Master's in Mass Communication, she now wishes to conquer the Finance world as a writer. With the power invested by the randomly chosen music, she is here to make Finance fun for you.

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