Vishesh Microfinance Yojana (VMY) 1

Vishesh Microfinance Yojana (VMY)
1. Introduction
Since 1997, NHFDC has been financing income generating schemes of the Disabled Persons for
their socio-economic empowerment through State Channelizing Agencies (SCAs). In order to
expand outreach, NHFDC has also established additional channel for on lending by signing
Memorandum of Agreements (MoAs) with Public Sector Banks (PSBs), Regional Rural Banks
(RRBs) and Other Institutions.
NHFDC intends to reach out unbanked population of the target group through last mile financers
at reasonable /moderate rates of interest for promoting sustainable and inclusive livelihoods. This
would interalia also include supporting projects which facilitate comfortable living for the
Divyangjans in the society.
NHFDC believes that partnering with Micro Finance Institutions (MFIs) as well as state level
organizations like Livelihood Missions, Swachchh Bharat Mission etc. would be an effective and
beneficial approach to promote collective action of the target group by adopting value chain
approach in clusters, which can significantly contribute to economic empowerment and general
well being of the target group. Efforts would also be made in collaboration with other
development partners to mobilise assistance for improving product quality; marketing and
developing value chains.
2. Objective
To provide prompt and need based finance for the target group and activities at reasonable rate of
interest through NBFC- MFI, Section-8-MFI, and NGO-MFI, SHG Federations, state
Government Missions and other state level organizations to pursue small/micro business and
developmental activities.
3. Eligibility Criteria
Eligibility norms as followed by SIDBI or NABARD from time to time, for such categories of
microfinance lending organizations, would be followed.
The eligibility norms shall be deliberated and recommended by the Loan Screening Committee
of the NHFDC based on the prevailing eligibility norms of the SIDBI or NABARD.
4. NHFDC Implementing Partner Relationship
Organisations fulfilling the eligibility criteria may be appointed to act as Implementing Partners
of NHFDC for Micro-finance loans. The relationship between NHFDC and the Implementing
Partner shall be governed and guided by contractual relationship by signing an Agreement
between the parties strictly in accordance with the NHFDC Policy and the terms and conditions
of the Agreement.
Notwithstanding anything hereinabove (including Para-3 above), the scheme may also be
implemented through Cluster Level Federations (CLFs) of NRLM/ State Livelihood Mission and
State Channelizing Agencies of NHFDC.
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5. Security
While seeking disbursement from NHFDC, Implementing Agencies shall provide the following
security to NHFDC for timely repayment of instalments of the loan sanctioned under this
Agreement together with interest thereon:-
a) Bank Guarantee of Public Sector Bank or Fixed Deposits of Public Sector Bank in the name of
“NHFDC” equivalent to the 10% or as per the prevailing norms of the SIDBI/ NABARD,
whichever is higher, of the loan amount to be disbursed to them.
The validity period of the Bank Guarantee/Fixed Deposit shall continue until all the dues of the
NHFDC have been paid in full or otherwise fully discharged by the Implementing Agencies. In
case Implementing Partner has provided Fixed Deposit to the NHFDC, the accrued interest on
the instrument along with the deposit instrument shall be released to the Implementing Partner
only on successful completion of loan repayments. In the event of default by Implementing
Agencies either for the whole or part amount advanced under this Agreement, the Bank
Guarantee shall be invoked/the Fixed Deposits along with accrued interest thereon shall be
encashed by NHFDC.
However, no such security (in the form of Bank Guarantee/ Fixed Deposits) shall be insisted the
scheme (VMY) is implemented through Cluster Level Federations (CLFs) under the guidance of
NRLM/SRLM. Moreover for SCA; no additional guarantee be insisted in case there existing state
Govt. Guarantee is sufficient.
b) Post-dated cheques (PDCs) in favour of NHFDC for the remaining amount as security.
The PDCs shall be obtained in line with the repayment schedule for the scheme. In addition, one
undated PDC equivalent to the 90% of amount to be disbursed will be obtained.
c) Exclusive first charge by way of hypothecation on all the book debts and receivables created out
of loan availed from NHFDC. Borrower should submit a quarterly CA certificate authenticating
the list of borrowers/statement of book debts along with the end use/purpose of loan, amount
outstanding and age-wise break-up of overdues.
6. Unit Cost
The unit cost of the Project shall not exceed Rs.60,000/-.
7. Quantum of Assistance
NHFDC's share shall be up to 90% of the project cost. The balance 10% shall be contributed by
the Implementing Agencies or other organizations acting as implementing partner of NHFDC,
and/or beneficiaries.
8. Interest Rate
NHFDC may charge from the Implementing Agencies such rate of interest as fixed by it from
time to time. NHFDC shall allow a spread, as fixed by it in the rate of interest, to be added by the
Implementing Agencies in the rate of interest charged by the Implementing Agencies from the
Persons with Disabilities (PwD) to be assisted. In no case the Implementing Agencies shall
charge higher rate of interest from PwD than as prescribed under lending policy of the
Corporation on the amount refinanced by NHFDC.
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Uniform Interest of 12.50% p.a. be prescribed for all PwDs doing away with gender based
interest rate.
Correspondingly, the rate of interest for lending by NHFDC would be 4.50% p.a. with margin
upto 8.00% for the partner agency. In other words, the pattern of charging interest under the
scheme shall be as follows:
NHFDC to Implementing Interest Spread to Implementing Agencies to

Agencies Implementing Agencies Beneficiaries
4.50% p.a. Upto 8% Upto 12.50% p.a.
Interest subvention shall be allowed by NHFDC as under:-
For implementing partner:

1% interest subvention would be allowed to the implementing partners on fulfilment of both the
following conditions, i.e.
a) Timely full repayment of dues on yearly basis and,
b)* Furnishing of 100% security for the loan exposure of NHFDC
*Not Applicable for CLF.
For PwD:
1% interest subvention shall be credited by NHFDC directly to the PwD borrower account by
Direct Benefit Transfer (DBT). The DBT shall be made after receiving confirmation from
implementing partner about on timely full repayment of dues on yearly basis by the PwD
(Beneficiary) subject to full repayment having been made by the implementing partner.
9. Repayment Period
The loan amount shall be repaid in quarterly installments within a maximum period of three
years from the date of each disbursement including the moratorium period of three months. In
addition, 120-days period is allowed for funds utilization. There shall not be any moratorium
period for payment of interest.
10. Rights of NHFDC :

In case of any dispute, decision of the Managing Director, NHFDC will be final & binding.
11. Other Terms and Conditions :
Other terms & conditions for the Scheme will be as per the guidelines issued by NHFDC for
credit based funding schemes.
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Vishesh Microfinance Yojana (VMY)

4. NHFDC Implementing Partner Relationship

The unit cost of the Project shall not exceed Rs.60,000/-.

NHFDC to Implementing Interest Spread to Implementing Agencies to

4.50% p.a. Upto 8% Upto 12.50% p.a.

Interest subvention shall be allowed by NHFDC as under:-

For implementing partner:

a) Timely full repayment of dues on yearly basis and,

b)* Furnishing of 100% security for the loan exposure of NHFDC

*Not Applicable for CLF.

10. Rights of NHFDC :

11. Other Terms and Conditions :

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