- Details
- Benefits
- Eligibility
- Exclusions
- Application Process
- Documents Required
- Frequently Asked Questions
- Sources And References
- Feedback
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Karnataka
Interest Subvention Scheme
Interest Subsidy
Loan
Micro Enterprises
Small Enterprises
Subvention
Details
The “Interest Subvention Scheme” has been introduced by the Government of Karnataka for new and existing profit-making micro and small manufacturing enterprises, as well as manufacturing-allied activity enterprises. The scheme aims to provide institutional credit for capital investments at reasonable interest rates and is implemented through the Karnataka State Financial Corporation (KSFC) in the state.
Benefits
Amount of Loan:
- The minimum loan size is ₹5.00 lakhs.
- The maximum loan size is ₹500.00 lakhs for Micro and Small Manufacturing Enterprises.
- ₹200.00 lakhs for manufacturing and allied services enterprises towards building, gross block of plant and machinery directly involved in production. The loan/s over and above these limits will carry contract rate of interest.
Rate of Interest:
- KSFC shall sanction loans with prevailing contract rate of interest and the promoters shall pay the interest accordingly. To avail the interest subvention under the scheme, the beneficiary / borrower shall be regular in repayment of installments of all the loans availed by the Enterprises from KSFC. The effective interest rate to be paid by beneficiary /borrower is the difference of contract rate and interest subvention of 5.5% p.a. reimbursed by Government of Karnataka.
Interest Subsidy [Subvention] Period:
- The unit is eligible for interest subsidy [subvention] for a period of 5 years from the date of first disbursement of the loan, even though if the repayment period extends beyond 5 years.
Eligibility
- Enterprises promoted by all categories of borrowers, proprietary concerns, partnership firms, companies & other legal entities.
- The scheme is extended for all new investments in building, plant and machinery directly involved in production by new enterprises and existing enterprises by way of expansion, diversification, modernization and technology up-gradation etc., considering the gross block of plant and machineries.
- Purchase of land from KIADB / KSSIDC or any other govt. agencies is not available under this scheme.
- The unit which has already availed the interest subsidy under any other scheme of Government of Karnataka / Government of India are also not eligible for interest subsidy under this scheme.
- The enterprise will be eligible for 5.5% p.a. interest subvention for a maximum period of five years from the date of first disbursement of respective loans even if the repayment period exceeds beyond five years.
Activities covered under this scheme:
- Agro & Food Processing, Textile, Ready-made Garments, Engineering, Automobiles, Electrical & Electronics, Paper & Paper Products, Printing & Publishing, Telecommunications, Software & IT related and Wood based activities.
Terms and Conditions:
- The terms and conditions of loan sanction such as promoters contribution, DER, Security requirement, viability of the project etc., shall be ensured as per the prevailing lending policy of the Corporation.
Exclusions
Enterprises / Activities not covered under the Scheme:
- Enterprises promoted by SC/ST and Women Entrepreneurs which have availed interest subsidy in any other scheme/s of State Government / Government of India.
- Refinancing / takeover of loans from other Bank/s, NBFCs / NSIC/ private financiers and Financial Institutions or for conversion of earlier loans/s available from KSFC.
- All infrastructure projects, Kalyana Mantapas, Hotels, Lodges, Restaurants, Guest Houses, Hospitals, Nursing Homes Housing and Commercial buildings / Commercial Real Estate (CRE) etc.,
- Business / Trading Activities.
- Malls, Cinema Houses etc.,
- Transports Vehicles, Construction equipment etc.,
- Industrial activities / enterprises not eligible for incentives and concessions as per annexure-2 of Karnataka Industrial Policy 2020-25 or the subsequent Industrial Policy in force.
- Any other activity other than manufacturing which is not specifically mentioned herein.
- Gross block means the total original purchase / invoice value of all existing machinery used in production activity including self-acquired, Bank / KSFC financed etc., plus the proposed machinery within overall limit of ₹500.00 lakhs as per definition of Small-Scale Enterprise in MSMED Act, 2006.
Application Process
Offline
Step 1: The interested applicant should visit (during office hours) the Branch Office Untitled-1 and request a hard copy of the prescribed format of the application form from the staff exclusively entrusted to issue and collect filled-in applications.
Step 2: In the application form, fill in all the mandatory fields, and attach copies of all the mandatory documents (self-attest, if required).
Step 3: Submit the duly filled and signed application form along with the documents to the Branch Office.
Step 4: Request a receipt or acknowledgment from the concerned authority to whom the application has been submitted. Ensure that the receipt contains essential details such as the date and time of submission, and a unique identification number (if applicable).
Documents Required
- Passport-size Photograph
- Registration certificate
- PAN Card
- Audited financial statements (if expanding an existing unit)
- Bank account details for loan disbursement
- Any other documents as specified by KSFC during the loan process
Frequently Asked Questions
Who is eligible to apply?
All categories of enterprises including proprietary concerns, partnerships, and companies that are making new investments in building, plant, and machinery for production purposes.
For how long is the interest subvention provided?
The 5.5% interest subvention is provided for a maximum of five years from the first disbursement.
Can enterprises that have availed of other subsidies apply?
No, enterprises that have already received interest subsidies under other schemes from the Government of Karnataka or the Government of India are not eligible.
What are the eligible uses of the loan under this scheme?
The loan can be used for investments in building, plant, and machinery directly involved in production.
Are SC/ST and women entrepreneurs eligible?
If they have already availed of subsidies from other schemes, they are not eligible for this scheme.
Is the purchase of land eligible for the loan?
No, the purchase of land from KIADB, KSSIDC, or any other government agencies is not covered under the scheme.
How is the interest subvention reimbursed?
The Government of Karnataka reimburses the difference between the contract rate and the 5.5% interest subvention.
What happens if I default on the loan repayment?
Enterprises that default on loan repayment will not be eligible to continue receiving the interest subvention.
Can loans be refinanced under this scheme?
No, refinancing or takeover of loans from other banks, NBFCs, or financial institutions is not allowed under this scheme.
What is the term of the loan repayment?
The loan repayment period depends on KSFC policies, but the interest subvention applies for up to 5 years.
What types of enterprises are not eligible for the scheme?
Businesses like trading, hotels, guest houses, restaurants, hospitals, commercial real estate, and certain industrial activities not eligible for incentives under the Karnataka Industrial Policy 2020-25.
Can I receive the loan for multiple projects?
Yes, as long as the total loan does not exceed the specified maximum limits and is for eligible uses.
Can I apply for both new and existing enterprises?
Yes, the scheme is available for both new and existing enterprises that are expanding or modernizing.
How do I ensure that I continue receiving the interest subvention?
You must maintain regular repayment of all KSFC loans to remain eligible for the interest subvention benefit.
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You have already submitted an application for this scheme. You may apply again only after 30 days i.e. after
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Check Eligibility
Karnataka
Interest Subvention Scheme
Interest Subsidy
Loan
Micro Enterprises
Small Enterprises
Subvention
Details
Benefits
Eligibility
Exclusions
Application Process
Documents Required
Frequently Asked Questions
The “Interest Subvention Scheme” has been introduced by the Government of Karnataka for new and existing profit-making micro and small manufacturing enterprises, as well as manufacturing-allied activity enterprises. The scheme aims to provide institutional credit for capital investments at reasonable interest rates and is implemented through the Karnataka State Financial Corporation (KSFC) in the state.
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Share
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