Raw Material Assistance Against BG

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 updation, 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…

Raw Material Assistance Against Bank Guarantee (RMABG) is a low interest short term loan offering by National Small Industries Corporation (NSIC), a Government of India (GOI) Enterprise, for Micro, Small & Medium Enterprises (MSMEs) to help them focus better on manufacturing quality products by financing their raw material purchase (both indigenous & imported).

Following benefits to MSMEs are envisaged under the Scheme:

Availability of raw material on credit enables MSMEs to execute the (bulk) orders in hand or pipeline with lesser self-funding
Enables MSMEs to avail economics of purchases like bulk purchase, cash discount etc., thereby reducing cost of purchase of materials

How is it being implemented?

Under this Scheme, direct credit is provided exclusively to,

MSMEs engaged in manufacturing or services sectors and looking to procure raw materials in India or abroad

What’s on offer?

I. Product

Short Term Loan
Ticket Size: Equivalent of 95% of Bank Guarantee (See Below) and based on the raw materials requirements of MSME & its financial position. Maximum exposure under this Scheme
- For Single Unit in
  - Manufacturing Business: up to ₹10 Crores
  - Service Business: up to ₹6 Crores
  - Infrastructure Business: up to ₹5 Crores
- All associate / sister concerns or connected accounts belonging to a Group
  - Manufacturing Business: up to ₹20 Crores
  - Service Business: up to ₹15 Crores
  - Infrastructure Business: up to ₹5 Crores
Limit sanctioned under this Scheme will be valid for One (1) year and thereafter renewed for One (1) year

II. Purpose

Raw material procurement either against advance payment or on credit
For information around whether raw materials required by you is covered under this Scheme, please contact NSIC via means mentioned below

III. Borrower Type

Proprietorship, Partnership Firm, Limited Liability Partnership (LLP), Private Limited Company, Public Limited Company

IV. Security or Collateral or Guarantee or Insurance

Security: For more information around this, please contact NSIC via means mentioned below
Collateral or Guarantee: Bank Guarantee (BG) from Approved Banks. For more information on the list of these Approved Banks, please contact NSIC via means mentioned below
Insurance: For more information around this, please contact NSIC via means mentioned below

V. Rate of Interest:

Currently ranges between 9.00% to 10.75% per annum (compound monthly) depending upon your business classification as Micro, Small or Medium Enterprise, and your business’s Credit Rating. Please scroll here for details
For delayed repayment, an additional Rate of Interest at 1.25% per quarter, over and above the normal rate of interest, would be levied

VI. Processing Fee:

1.00% for new sanctions & renewals
- For renewals for Micro Enterprises alone: 0.50%

VII. Money Margin Requirement

As required by Approved Banks to give you a Bank Guarantee to avail benefit under this Scheme

VIII. Tenure, Repayments & Pre-Closures

Tenure: up to 180 days. It can further be extended on the request of MSME with the consent of respective NSIC Zonal Head, provided the MSME serves interest, total outstanding is within BG limit and BG remains valid till extended period
Repayments: Bullet payment
Pre-payment & Foreclosure Charges: For more information around this, please contact NSIC via means mentioned below

IX. Turnaround Time

For more information around this, please contact NSIC via means below

Process:
- Duly filled application form is to be submitted as suggested below
- Preliminary appraisal and MSME inspection is carried out by NSIC
- Sanction of Limit to MSME is decided
- Agreement is signed between NSIC & MSME
- MSME submits proforma invoice/ original invoice/ material receipt note with specific request to release the payment
- Release of payment by NSIC to the supplier (for the raw material purchase) as requested by MSME

Interested? Read ahead to check your eligibility….

I. Are you a Manufacturing or Service MSME having a valid Udyam Registration Certificate?

II. You are not purchasing Raw Materials for trading?

If your answers to the questions above are an emphatic YES, you are all set to avail credit under NSIC’s Raw Material Assistance Against Bank Guarantee!