Schemes of HP Minorities Finance and Development Corporation (HPMFDC)

What is the HP Minorities Finance and Development Corporation?

The H.P. Minorities Finance and Development Corporation (HPMFDC) is a state undertaking registered under Section 25 of the Companies Act, 1956 as a not-for-profit company on 23 September 1996. According to the corporation's own website at minority.hp.gov.in, it exists to advance the socio-economic and educational position of minority communities in Himachal Pradesh whose families live below double the poverty line, and it does that by lending money at rates far below what any bank would charge.

HPMFDC wears two hats. It is the State Channelising Agency (SCA) for the National Minorities Development and Finance Corporation (NMDFC) under the Ministry of Minority Affairs, and it is also the state channelising agency for the National Handicapped Finance and Development Corporation (NHFDC) under the Ministry of Social Justice and Empowerment. That is why one corporation runs two quite different sets of loan products; one for notified minorities, one for persons with disabilities. The disability side of the work is also referred to as the H.P. Divyangjan Finance and Development Corporation.

The corporation is not a grant body. Every scheme described here is a loan that has to be repaid, with interest, on a quarterly or monthly schedule. What makes the schemes worth applying for is the price: 3 to 8 per cent a year against the 11 to 16 per cent an unsecured business loan would cost commercially.

Which schemes does HPMFDC run?

For notified minorities

The term loan covers agriculture and allied activities, technical trades, small business, artisan and traditional occupations, and the transport and service sectors. The corporation's illustrative list of fundable ventures gives a good sense of the scale: auto three-wheeler, general store, ready-made garment shop, dhaba, auto repair workshop, flour mill, tea shop, medical shop, cloth business, photostat unit, village utility store, steel fabrication, dairy, construction equipment on hire, tractor, and commercial vehicles up to Rs 10 lakh.

Educational loans are capped at Rs 4 lakh in any one year and cover professional and technical courses.

For persons with disabilities

Women applicants with disabilities receive a 1 per cent rebate on the interest rate. Sector sub-limits apply within the Rs 25 lakh ceiling: Rs 3 lakh to Rs 5 lakh for service and trading, Rs 10 lakh for agriculture and allied activity, Rs 10 lakh for a commercial vehicle, Rs 10 lakh where the applicant has mental retardation, cerebral palsy or autism, and Rs 25 lakh for a small industrial unit.

Who is eligible for HPMFDC loans?

You can apply if:

• You hold a Himachal Pradesh domicile with a bonafide certificate.
• You belong to a minority community notified by the Government of India, Sikh, Muslim, Buddhist (Bodh), Parsi or Christian: or you hold a medical certificate of at least 40 per cent disability.
• You are aged 18 to 55 years if applying as a minority beneficiary, or 18 years and above if applying as a person with disability.
• Your annual family income is within the applicable limit. The corporation's schemes page records Rs 81,000 for rural and Rs 1,03,000 for urban minority applicants, and notes the income test as exempted for persons with disabilities. The state government has separately announced a raised family income ceiling of Rs 3 lakh a year for minorities and Divyangjan applicants, which matches NMDFC's own revised norm, so confirm which figure is being applied in the current year before you file.
• You can offer the required security.

You cannot apply if:

• You are not a domicile of Himachal Pradesh, however long you have worked in the state.
• You do not belong to a notified minority community and do not hold a 40 per cent disability certificate. The corporation does not lend to the general population.
• You are a defaulter of any government, semi-government institution or bank. This is stated explicitly in the corporation's eligibility conditions and is checked before sanction.
• You are outside the age band, that is under 18, or over 55 as a minority applicant.
• Your family income exceeds the notified ceiling.
• You cannot provide collateral or a guarantee where the scheme requires it.

What security and margin money are required?

Minority term loans. The corporation requires either collateral security equal to the loan amount, normally land-based, or the guarantee of a government employee whose monthly take-home salary is at least one-fifteenth of the loan; put the other way, a guarantee worth at least 15 times the monthly take-home salary.

Disabled applicants. Security scales with the loan:

Financing pattern for minorities: NMDFC funds 90 per cent, subject to a Rs 10 lakh cap of NMDFC money in any one case, the beneficiary contributes a 5 per cent margin, and the corporation puts in the remaining 5 per cent as the state share.

Financing pattern for disabled applicants: loans up to Rs 50,000 are financed 100 per cent, Rs 50,000 to Rs 1 lakh at 95 per cent, up to Rs 5 lakh at 90 per cent and above Rs 5 lakh at 85 per cent, with a 5 per cent beneficiary margin above Rs 1 lakh.

For education loans, the promoter's contribution is nil up to Rs 4 lakh, 5 per cent above Rs 4 lakh for study in India and 15 per cent for study abroad. A processing fee of Rs 5,000 applies to education loans for study abroad and is adjusted against the margin money.

What documents are required?

How to apply for an HPMFDC loan

1. Open minority.hp.gov.in and go to the schemes and download-forms section.
2. Download the correct form — there are two separate application forms, one for minorities and one for Divyangjan applicants. Using the wrong form is a routine cause of a returned file.
3. Decide your scheme and amount, and prepare a project report for the proposed venture with supplier quotations, or the fee schedule if you are applying for an education loan.
4. Collect the supporting papers, bonafide certificate, income certificate, community or disability certificate, age proof, bank statements and photographs.
5. Arrange the security: land documents for collateral, or a guarantor's salary certificate and service details for a government employee guarantee.
6. Submit the completed file to the corporation as the State Channelising Agency. Education loan applicants for NHFDC schemes may also route the application directly to NHFDC.
7. Attend the verification and appraisal stage, where the corporation checks the project's viability, the applicant's eligibility and the security offered.
8. On sanction, deposit your 5 per cent margin money where the scheme requires it, sign the loan documents, and receive the disbursement in your bank account.

The corporation also provides an online application route through its portal.

How do I follow up on my application?

HPMFDC does not run a public status-tracking dashboard of the kind labour boards use. Follow-up is therefore by contact with the corporation:

• Managing Director's office: 0177-2622164, email hpmfdc2014@gmail.com
• Minister in charge of the department: 0177-2621580

Ask for the file number given at submission and for the stage the file has reached, receipt, appraisal, sanction or disbursal. Since the corporation's lending depends on refinance released by NMDFC and NHFDC in a given financial year, a file that is otherwise in order can still wait for funds, and the corporation is the only source that can tell you which of those two situations applies to your case.

Why do HPMFDC loan applications get rejected?

• Default history with a bank or government institution, which is a stated disqualification.
• Income certificate above the ceiling for the year in question.
• Security not acceptable, land offered is jointly held without co-owner consent, or the guarantor's salary does not meet the 15-times test.
• Wrong application form used, minority instead of Divyangjan or the reverse.
• Community or disability certificate not from the competent authority, or a disability certificate below 40 per cent.
• Weak or absent project report, so the corporation cannot assess whether the venture will generate enough income to service the loan.
• Age outside the band; over 55 for a minority applicant.
• Funds exhausted for the year, in which case the file is carried forward rather than rejected on merit.

Key dates

HPMFDC lending is open through the year with no fixed last date announced. The practical constraint is the financial year: the corporation lends against refinance from NMDFC and NHFDC, so applications filed early in the financial year have a better chance of being funded in the same year. Repayment on a minority term loan runs over 5 years and on a disabled applicant's term loan over 7 years. Education loan repayment begins when the course ends or six months after employment, whichever is earlier.

Help and grievance redressal

• H.P. Minorities Finance and Development Corporation, Shimla; Managing Director's office, 0177-2622164
• Email: hpmfdc2014@gmail.com
• Portal: minority.hp.gov.in, which carries the schemes page, downloadable forms and FAQs
• National bodies: NMDFC under the Ministry of Minority Affairs, and NHFDC under the Ministry of Social Justice and Empowerment, for scheme-level policy questions

No agent is authorised to charge a fee for arranging an HPMFDC loan sanction. The corporation charges only the notified processing fee on overseas education loans; every other charge quoted to you is not the corporation's.