Long Term-Loan to SC Co-op Spinning Mills under Special Component Plan

What is the long-term loan scheme for SC co-operative spinning mills?

Long Term-Loan to SC Co-op Spinning Mills under Special Component Plan is an institutional financing scheme of the Social Justice and Special Assistance Department, Government of Maharashtra, funded from the Special Component Plan, the earmarked share of the state plan meant for Scheduled Caste development.

The scheme exists because a co-operative spinning mill is a capital-heavy venture. A society of Scheduled Caste members can rarely raise the equity that a bank requires before it will lend, so the project never starts. Under this scheme the state supplies both share capital and a long-term loan, bringing the society's own requirement down to a small fraction of the project cost. The stated objectives on the department's page are to bring Scheduled Caste communities into the mainstream of development through co-operation, and to create and encourage self-employment for unemployed persons from Scheduled Castes.

Long Term-Loan to SC Co-op Spinning Mills under Special Component Plan is not a citizen benefit. There is no personal loan, subsidy or stipend for an individual under it. Only a registered Scheduled Caste co-operative society can apply, and the money goes into the mill project, not to members.

How is the project financed?

The Social Justice and Special Assistance Department describes the arrangement as the Director of Textiles sanctioning nine times the member share as government share capital, and the Social Welfare department sanctioning long-term loan assistance on a 1:1 basis, that is 50 per cent of the project cost. Both descriptions produce the same structure: 5 per cent members, 45 per cent state equity, 50 per cent state long-term loan.

The Commissionerate of Social Welfare records a maximum project cost of Rs 80 crore for spinning mill and power loom projects assisted under the scheme.

Interest rate, moratorium and repayment schedule are not published on the department's scheme pages. A society must obtain those terms from the sanction order and the Government Resolutions rather than from any secondary source.

Who is eligible for the SC spinning mills long-term loan?

A society can apply if:

• It is a registered co-operative society and a Scheduled Caste co-operative spinning mill, functioning in Maharashtra.
• Its members have collected at least Rs 80 lakh, or a minimum of 5 per cent of the project cost, as member shares.
• The project has been appraised by the bank or financial institution lending to the mill, or by one of the approved appraisal agencies; MITCON Ltd, Pune; Agriculture Financial Corporation, Mumbai; or Dattajirao Kadam Technical Institute, Ichalkaranji.
• The society has paid the appraisal fee of Rs 2.50 lakh, which is borne by the applicant.
• The society has obtained the government share capital sanction from the Textile department before approaching the Social Welfare department for the loan.

You cannot apply if:

• You are an individual — a worker, weaver, technician or entrepreneur. Individuals are not eligible for any personal benefit under this scheme.
• The society is not registered, or is not a Scheduled Caste co-operative.
• Members have not raised the required share money. The state contribution is triggered by the member share, so the sequence cannot be reversed.
• The project has no appraisal by a bank, financial institution or approved agency.
• The project exceeds the maximum cost recorded for the scheme, or falls outside the spinning mill and power loom activity the scheme supports.

How to apply for the long-term loan

1. Register and constitute the society properly as a Scheduled Caste co-operative spinning mill, with bye-laws, a member register and caste certificates on file.
2. Collect member shares of at least Rs 80 lakh or 5 per cent of the project cost, and hold the money in the society's account with documentary proof.
3. Get the project appraised by the lending bank or financial institution, or by MITCON Pune, Agriculture Financial Corporation Mumbai or Dattajirao Kadam Technical Institute Ichalkaranji, paying the Rs 2.50 lakh appraisal fee.
4. Submit the appraised project to the Textile department of the Government of Maharashtra and obtain the government share capital sanction from the Director of Textiles, Maharashtra State, Nagpur.
5. Apply to the Assistant Commissioner, Social Welfare of the district with the full project file: registration papers, member list and caste certificates, appraisal report, proof of share collection, bank sanction, share capital sanction, land documents and audited accounts.
6. The district office scrutinises and forwards the proposal to the Commissionerate of Social Welfare and the Social Justice and Special Assistance Department for sanction of the 50 per cent long-term loan.
7. Execute the loan documents and draw the loan in instalments as the project reaches the milestones set in the sanction order.

What documents does a society need?

Which government resolutions govern the scheme?

Three Government Resolutions govern the scheme, dated 30 April 2000, 2 July 2004 and 28 August 2014. A society preparing a proposal should obtain copies of all three from the district Assistant Commissioner, Social Welfare, because the financing pattern, the member share floor and the appraisal requirements were set and revised through them.

Why do proposals get returned?

• Member share not fully collected, or the collection not evidenced by bank records.
• No appraisal report, or an appraisal by an agency not on the approved list.
• Share capital sanction from the Textile department missing, so the Social Welfare loan cannot be considered.
• Society not a Scheduled Caste co-operative, or member caste certificates not produced.
• Land or site papers incomplete, leaving the project without a location.
• Individual applicants, which the scheme does not entertain at all.

Where does a society get help?

• Assistant Commissioner, Social Welfare of the district. The application and scrutiny office for the loan component.
• Commissionerate of Social Welfare, Pune, which processes proposals at state level.
• Director of Textiles, Maharashtra State, Nagpur, for the share capital component and for project approval on the textile side.
• Social Justice and Special Assistance Department, Mantralaya, Mumbai, for the governing Government Resolutions and sanction orders.

A note for readers who arrived here looking for personal help: this scheme cannot give an individual a loan. Individuals from Scheduled Castes looking for self-employment finance in Maharashtra should approach the Mahatma Phule Backward Class Development Corporation or the Sant Rohidas Leather Industries and Charmakar Development Corporation, both of which run individual loan and subsidy schemes through the same district Social Welfare offices.