Term Loan Scheme of NMDFC

What is the Term Loan Scheme of NMDFC?

The Term Loan Scheme is the flagship self-employment lending programme of the National Minorities Development and Finance Corporation (NMDFC), a company under the Ministry of Minority Affairs, Government of India. According to NMDFC, the scheme provides concessional loans for self-employment and income-generating activities to the "backward sections" among the notified minority communities, to help them set up viable ventures and raise their incomes.

NMDFC was set up in 1994 to promote the socio-economic development of minority communities. The Term Loan is used for any commercially viable and technically feasible venture, from small manufacturing and trade to services, transport and agriculture-allied activities.

Crucially, NMDFC does not lend directly to individuals. It routes funds through State Channelizing Agencies (SCAs) nominated by each State or UT government, and through partner banks. This institutional channel is the single most important thing an applicant needs to understand.

How much can you borrow, and at what rate?

According to NMDFC, the Term Loan operates through two credit lines based on family income:

• Credit Line-1, for applicants with annual family income up to Rs 3.00 lakh (both rural and urban). Maximum loan of up to Rs 20 lakh per beneficiary, at a concessional interest rate of 6% per year to the ultimate beneficiary.
• Credit Line-2, for applicants with annual family income up to Rs 8.00 lakh. A higher loan of up to Rs 30 lakh per beneficiary is available, at a higher rate of interest than Credit Line-1.

NMDFC typically finances a large share of the project cost, with the balance met as promoter/margin contribution and any applicable subsidy, as decided by the SCA appraising the case. The exact sanctioned amount depends on the project cost and its assessed viability.

Who is eligible for the NMDFC Term Loan?

You may apply if:

• You belong to a community notified as a minority under the National Commission for Minorities Act, 1992 — currently Muslims, Christians, Sikhs, Buddhists, Parsis and Jains.
• Your annual family income is within the ceiling for the credit line you want: up to Rs 3 lakh for Credit Line-1, or up to Rs 8 lakh for Credit Line-2.
• You have a commercially viable, technically feasible self-employment venture to finance.

You cannot apply if:

• You do not belong to a notified minority community, the scheme is restricted to those communities and applicants outside them are not eligible.
• Your family income exceeds Rs 8 lakh a year, which is above even the Credit Line-2 ceiling.
• The loan is sought for a purpose that is not an income-generating, viable venture (for example purely personal consumption).

NMDFC gives special focus to women beneficiaries and to the weaker sections among eligible communities, but the community and income criteria still apply.

What documents are required?

Exact documentation is specified by the State Channelizing Agency or partner bank handling your application, and can vary slightly between states.

How to apply for the NMDFC Term Loan

Because NMDFC lends through intermediaries, the application is made to your State Channelizing Agency or partner bank, not to NMDFC directly:

1. Identify your State Channelizing Agency (SCA). Each State/UT has a nominated agency (a state minorities finance/development corporation); NMDFC also works with partner banks such as Canara Bank and Union Bank of India. The list is available on nmdfc.org.
2. Prepare your project proposal and gather documents: minority community proof, income certificate, Aadhaar, and a business/project plan.
3. Submit the loan application to the SCA or partner bank, selecting the credit line (CL-1 or CL-2) that matches your family income.
4. Appraisal and sanction. The SCA/bank appraises the project's viability and your repayment capacity, and sanctions the loan amount.
5. Disbursal and repayment. On sanction, the loan is disbursed for your venture, and you repay in instalments to the SCA/bank at the applicable concessional rate.

Where to get help

The scheme is run by NMDFC under the Ministry of Minority Affairs, with the official website nmdfc.org, where you can find the scheme details, credit-line terms and the list of State Channelizing Agencies and partner banks. NMDFC's corporate office is at Scope Minar, Laxmi Nagar, New Delhi (phone 011-22441442 / 44). For the actual loan, however, the correct point of contact is your State Channelizing Agency or partner bank, which receives and processes applications.