The Interest Subsidy Scheme for SC/ST Entrepreneurs is a business empowerment initiative by the Government of Karnataka in collaboration with the Karnataka State Financial Corporation (KSFC). The scheme provides interest subsidy on loans sanctioned for establishing or expanding micro/small/service enterprises. Eligible Scheduled Caste (SC) and Scheduled Tribe (ST) entrepreneurs can now access business loans at an effective interest rate of only 4%, helping drive inclusive economic growth and job creation.
Key Highlights for KSFC Loan Subsidy
• Scheme Name: Interest Subsidy Scheme for SC/ST Entrepreneurs
• Implemented By: Government of Karnataka & KSFC
• Loan Amount Range: ₹20 lakhs – ₹1,000 lakhs (₹10 crores)
• Effective Interest Rate: 4% per annum
• Repayment Period:
-
Up to ₹500 lakhs: 8 years (including moratorium)
-
₹500 to ₹1,000 lakhs: 10 years (including moratorium)
• Application Mode: Offline through KSFC branch offices
Benefits to the Scheme
• Subsidized Loans:
-
Only 4% interest payable by the entrepreneur
-
Government reimburses the difference between KSFC’s standard rate and 4%
• Large Loan Amounts:
-
Minimum loan: ₹20 lakhs
-
Maximum loan: ₹10 crores
-
Includes term loan + working capital term loan (up to ₹50 lakhs; non-repeatable)
• Multiple Usage Options:
-
Start a new business
-
Expand, diversify, or modernize existing SC/ST-owned units
-
Avail loans more than once, provided the total sanctioned amount remains within the ₹10 crore cap
Eligibility Conditions
• The business unit must be 100% SC/ST owned
-
In a proprietary/partnership/company, all promoters must belong to SC/ST communities
• Units must not be defaulters to KSFC
• No other interest subsidy availed from GoK/GoI for the same purpose
• SC/ST entrepreneurs may belong to either or both communities
How to Apply – Offline Process
-
Visit the nearest KSFC Branch Office
-
Collect the prescribed application form from the designated officer
-
Fill the form with correct business and personal details
-
Attach mandatory documents (self-attested copies)
-
Submit the application form and request an acknowledgment/receipt with submission date and reference number
Necessary Documents for Application
• Passport-size Photograph
• SC/ST Certificate of the entrepreneur
• Bio-data and Net Worth Statement
• Affidavit (format: Affidavit-SC-ST.pdf) declaring community status
• Audited Financial Statements (for existing units applying for expansion)
• Bank Account Details (for loan disbursement)
• Any additional documents required by KSFC
Frequently Asked Questions (FAQs)
Q: What is the objective of this scheme?
A: To promote entrepreneurship among SC/ST communities by offering interest subsidies on KSFC loans for new or existing businesses.
Q: Who is eligible?
A: SC/ST entrepreneurs whose business is fully owned by individuals from these communities and who have not availed other interest subsidy schemes.
Q: What is the effective interest rate?
A: 4% per annum (subsidized by the Government of Karnataka).
Q: What are the minimum and maximum loan amounts?
A: Minimum: ₹20 lakhs; Maximum: ₹1,000 lakhs (₹10 crores).
Q: Can I apply for this loan more than once?
A: Yes, for different purposes. But the total loan amount should not exceed ₹10 crores.
Q: What is the repayment period?
A: Up to 8 years (loan ≤ ₹500 lakhs) and up to 10 years (loan > ₹500 lakhs).
Q: Can I use this for a new business?
A: Yes, it supports new business setup as well as expansion/modernization of existing units.
Q: What happens if I default on repayment?
A: The subsidy benefit will be withdrawn, and full interest as per KSFC norms will be applicable.
Q: Is the working capital term loan repeatable?
A: No, it can be sanctioned only once, up to ₹50 lakhs.
Sources and References
• KSFC Official Website
• Scheme Guidelines
• [Affidavit Format – SC/ST (PDF)]
• Contact local KSFC Branch Offices for offline forms and assistance
