Micro Finance Scheme (Laghustariya Dhiran Yojana) — Gujarat Backward Classes Development Corporation

What is the GBCDC Micro Finance Scheme?

Micro Finance Scheme, known in Gujarati as Laghustariya Dhiran Yojana, is a small self-employment loan run by the Gujarat Backward Classes Development Corporation (GBCDC) under the Social Justice and Empowerment Department, Government of Gujarat. The corporation describes the purpose of the scheme in one line: to create self-employment for men of the backward classes through small-ticket credit.

Micro Finance is one of six credit lines the corporation operates. The others are Term Loan for animal husbandry, small business and transport, New Swarnima for women, Mahila Samruddhi Yojana for women, Swayam Saksham for larger projects up to Rs 5 lakh, and New Akansha for education loans up to Rs 15 lakh. Micro Finance sits at the smaller end of that ladder and is aimed at a man who wants working capital or equipment for a modest trade rather than a large project.

Key features

• Maximum loan of Rs 1,25,000 per individual.
• Interest of 5 per cent a year, well below commercial lending rates.
• 90 per cent of the unit cost is financed as loan. Within the funding pattern, 90 per cent comes from the national corporation, 5 per cent from the Gujarat government and 5 per cent is the beneficiary's own contribution.
• Repayment in 48 equal monthly instalments, including interest.
• Loan money is released by RTGS or NEFT into the beneficiary's own bank account, never in cash.
• No subsidy is attached. The corporation states this explicitly.

The corporation head office is at 2nd Floor, Block No. 11, Dr Jivraj Mehta Bhavan, Gandhinagar 382010, and its lending is funded by the state government together with the National Backward Classes Finance and Development Corporation (NBCFDC), New Delhi.

Who is eligible for the GBCDC Micro Finance Scheme?

You can take this loan if:

• You belong to a socially and educationally backward class of Gujarat, the category the corporation refers to as Baxi Panch, and hold a caste certificate from a competent authority.
• Your total family income does not exceed Rs 3,00,000 a year, certified by a competent authority.
• Your age is between 21 and 45 years on the date of the application.
• You have experience in the trade you are borrowing for, where that trade needs technical or other skills.
• You are a man. Micro Finance is the men's scheme; the corporation runs Mahila Samruddhi Yojana as the parallel scheme for women at the same Rs 1.25 lakh ceiling.

You cannot apply if:

• You do not belong to a listed socially and educationally backward class of Gujarat.
• Your family's annual income is above Rs 3,00,000.
• You are under 21 or over 45 on the date of application.
• You have already taken a loan from this corporation, or from another corporation of the Developing Castes Welfare wing of the Social Justice and Empowerment Department. The department's rule is that a loan may be taken from only one corporation.
• Another member of your family has a loan running that has not yet been fully repaid.
• You cannot produce a guarantor and a property on which the corporation's charge can be registered, where the sanctioned amount requires one.

Priority in sanction depends on the eligibility criteria being met and on the funds available in that year. The corporation states that all applicants meeting the prescribed criteria are taken up in order.

What documents are required?

How to apply for the GBCDC Micro Finance loan

1. Watch for the corporation's advertisement. The Gujarat Backward Classes Development Corporation invites applications in a notified window once the state government and NBCFDC release funds for the year, and publicises it in newspapers and on its website.
2. Open gbcdconline.gujarat.gov.in, the corporation's online loan portal. The FAQ page states that the loan application form is available only online on this portal; there is no paper form to collect from an office.
3. Register and fill in the online application, selecting Laghustariya Dhiran (Micro Finance) as the scheme, and enter your caste, income, age, business plan and bank details.
4. Scan and upload the supporting papers, caste certificate, income certificate, age proof, Aadhaar, ration card, experience certificate and bank passbook copy, and submit the form within the notified time limit.
5. Wait for the Beneficiary Selection Committee to consider your application. The committee grants provisional (in-principle) approval based on caste, the Rs 3 lakh income ceiling, business experience and fund availability.
6. On provisional approval you are informed by post. Execute the loan documents yourself, get the guarantor affidavits notarised in the prescribed format, arrange the charge on the property, and post the complete set to the corporation office in Gandhinagar. The corporation confirms that applicants do not have to travel to Gandhinagar to sign documents.
7. Once the documents are accepted, the loan is credited to your bank account by RTGS or NEFT, subject to funds being available.

How much do you repay and when?

Micro Finance loans are repaid in 48 equal monthly instalments including interest at 5 per cent a year. Repayment starts in the month following the month in which the money reaches your bank account, so there is no long moratorium; a borrower who receives the loan in one month begins paying the next.

Instalments must be deposited into the corporation's designated Bank of India account number 202010100020790, which is accepted at any Bank of India branch in Gujarat. The corporation sends each beneficiary a bank slip book for this purpose, and its website also carries an online payment link for loan instalments.

What security and guarantors are needed?

The corporation applies a graded guarantee rule:

• Loans up to Rs 30,000, self-guarantee only.
• Loans up to Rs 1,00,000 — one guarantor.
• Loans above Rs 1,00,000; two guarantors.

In every case a charge equal to one-and-a-half times the sanctioned loan must be registered in the corporation's name on one property belonging either to the borrower or to a guarantor. Guarantors with property must submit all property papers notarised in the format the corporation prescribes. Because the Micro Finance ceiling is Rs 1.25 lakh, most sanctions in this scheme fall in the two-guarantor bracket.

Why Micro Finance applications get rejected

• Caste certificate not from a listed backward class, or issued by an authority the corporation does not accept.
• Income certificate above Rs 3,00,000, or an income certificate that has expired.
• Age outside 21 to 45 on the date of application.
• No experience certificate for a trade that requires skill.
• Incomplete guarantor papers, missing notarisation, or a property on which the charge could not be registered.
• An existing loan in the applicant's name or in the family from this or another Social Justice department corporation.
• Funds exhausted for the year. Applications are cleared within the units advertised and the funds released, so a technically eligible applicant may be deferred to a later cycle.

Applications are first sorted district-wise into defect-free and defective lists before they reach the Beneficiary Selection Committee, so a small documentary gap is the most common and most avoidable reason for a file falling out.

Points borrowers most often get wrong

• There is no waiver. The corporation's FAQ answers three separate questions on this, the loan is not waived, there is no subsidy, and the debt is not cancelled on the borrower's death.
• One loan per person, and one corporation only. You cannot hold a Micro Finance loan and a loan from, say, the Gujarat Gopalak Vikas Nigam at the same time.
• No agent is needed. Applications are filed by the applicant on the online portal, and no fee is charged for applying.

Help and grievance redressal

• Gujarat Backward Classes Development Corporation, Managing Director, 2nd Floor, Block No. 11, Dr Jivraj Mehta Bhavan, Gandhinagar 382010.
• Phone: +91 79 23257559 (also 23257556, 23257557, 23257558, 23257560, 23257561).
• Online portal: gbcdconline.gujarat.gov.in for applications, status and instalment payment.
• Right to Information and Public Information Officer details are published on the corporation's website for written grievances.

If your bank account changes during the loan period, return the old cheques and give the corporation fresh signed cheques and a copy of the new passbook, the same procedure the Social Justice department corporations follow for all their borrowers.