46 XX | Enlightener Series | A. Public Sector Schemes

Disclaimer…before you read ahead!

The information contained herein is of a general nature and for information purposes only, with the intent of raising awareness around various resources, schemes etc. available for women entrepreneurs in India. It is not intended to address the circumstances of any particular individual or entity. It does not purport to be all-inclusive or necessarily contain all the information that may be relevant for the reader, and may be subject to updating, revision or amendment. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to remain accurate in the future. The reader, therefore, is required to exercise their discretion; and not act on such information without appropriate professional advice after a thorough examination of the particular situation.

Furthermore, we are not a lender and are not authorized by the Reserve Bank of India to act as one. By disseminating the information contained herein, we are not soliciting any borrower or customers for the company or organization mentioned herein nor do we intend to syndicate any capital for the reader of this article.

About this scheme..

IOB Pragati Scheme, launched in June 2024, is a semi unsecured loan offering by Indian Overseas Bank (IOB) to provide financial assistance to Start Ups for innovation, development or improvement of products or processes or services, or if they are scalable with high potential for employment generation & wealth creation.

How is it being implemented?

Under this Scheme, direct financial assistance in the form of loans is given exclusively to,

Start-ups recognised by Department for Promotion of Industry and Internal Trade (DPIIT)

What’s on offer?

I. Product

Term loan, Working capital facility (fund based (Cash Credit), & non fund based like Letter of Credit (LC), Letter of Guarantee (LG))
Ticket Size: ₹10 Lakhs – ₹50 Crores

II. Purpose:

Acquisition of or investment in fixed assets
Working capital requirements

III. Borrower Type:

Registered Partnership, Limited Liability Partnership (LLP), Private Limited Company

IV. Security or Collateral or Guarantee or Insurance

Security: Primary charge on assets created out of IOB’s finance
Collateral
- For loans upto ₹10 Crores: Nil as the loan will be secured under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) Scheme or Credit Guarantee Scheme for Startups (CGSSI)
- For loans above ₹10 Crores: Hybrid collateral coverage model will be applicable with minimum 25% tangible collateral for uncovered amount
Guarantee: Nil
Insurance: For more information around this, please contact IOB via means mentioned below

V. Interest Rate

Term Loan & Fund based working capital facility: May range from 10.00% per annum and upwards. For more information around this, please contact IOB via means mentioned below

VI. Processing Fee

VII. Margin Money Requirement

Term loan: 20% of Project Cost
Fund based working capital facility (Cash Credit): 25% on paid stocks & 40 % on Book Debts up to 180 days

VIII. Tenure, Repayments & Pre-Closures

Tenure
- Term loan: upto 10 years including 36 months moratorium
- Fund based working capital facility (Cash Credit): 12 months subject to renewal. The Working capital limit may be kept in abeyance pending completion of project or earlier as the case may be
- Non-fund based working capital facility (LC, LG): On due date or on demand as case may be
Repayments
- Term loan: Flexibility of monthly or quarterly or half yearly or annual instalments or ballooning instalments based on the projected cash flow of the unit. However, interest shall be recovered separately as and when debited
Pre-payment & Foreclosure Charges: For more information around this, please refer to IOB’s latest Service Charges here

IX. Turnaround Time

For more information around this, please contact IOB via means mentioned below

Interested? Read ahead to check your eligibility….

I. Is yours a Start-up recognized by DPIIT?

II. Has your Start-up reached a stage of stable revenue stream, as assessed from audited monthly statements over a 12-month period, amenable to debt financing?

III. Can you confirm that your Start-up has not been in default to any lending or investing institution and has not been not classified as Non-Performing Asset as per RBI guidelines?

IV. Is the constitution of your Start-up as per Start-up India Scheme of GOI?

V. Is the age of your Start-up < 10 years from the date of incorporation?

VI. Is the annual turnover of your Start-up < ₹100 Crores in any of financial year since incorporation?

VII. Is the CIBIL or CRIF High Mark Score of all Partners or Directors 700 and above?

If your answers to the questions above are an emphatic YES, you are all set to avail loan under IOB Pragati Scheme!

So…how big is this scheme and what has been done so far?

I. Details around this don’t seem to be available in the public domain

So, now, how should you go about it?

I. For submitting application:

Please visit one of IOB’s 3,269 branches nearest to you. Do ask them to connect you to the specialized Start-up branch(es) that deal with IOB Pragati Scheme

II. For information on documentation requirements, please contact IOB via means mentioned below

III. For any queries, please contact IOB via