Khadi and Village Industries Commission (KVIC)

Khadi and Village Industries Commission (KVIC) plans, promotes, organizes, and implements programs for the development of Khadi and other village industries in rural areas, nationwide. KVIC also helps in building up the reserve of raw materials for supply to producers. The commission focuses on the creation of common service facilities for the processing of raw materials, such as semi-finished goods. KVIC has also helped in the creation of employment in the Khadi industry.

Functions of KVIC

• Building up of a reserve of raw materials and implementation for supply to producers
• Formation of common service facilities for processing of raw materials that include semi-finished goods
• Promoting the sale and marketing of Khadi and Village Industries products, as well as handicrafts
• Promoting research in the village industries sector-related production techniques and equipment
• Providing financial assistance to individuals and institutions for the development and operation of Khadi and Village industries

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Objectives of KVIC

• To promote Khadi in rural areas
• To provide employment
• To produce saleable articles
• To create self-reliance amongst the poor
• To build up a strong rural community

Features of KVIC

• Interest Rate: Depends on the applicant’s profile and business requirements
• Loans offered are directed and governed by PMEGP under which is below-mentioned criteria for specific MSMEs:

   ° Loan Amount for Manufacturing Sector: Maximum Rs. 50 lakh
   ° Loan Amount for Business and Service Sector: Maximum Rs. 20 lakh

• Funding Pattern: Mentioned below in PMEGP Scheme
• Repayment Tenure: From 3 years – 7 years, including 6 months of the moratorium period
• Income Capping: No criteria
• Margin: Lock-in for 3 years in separate account later adjusted with KVIC loan

Interest Rate Subsidy Scheme

The interest subsidy scheme offered by KVIC shall be applicable to specific loans offered by financial agencies. Loans raised by KVIC for disbursement as capital investment and working capital loans are offered by:

• Institutions: Registered under Societies Registration Act 1860
• Co-operative Society: Registered under the Co-operative Societies Act 1912
• Charitable Trusts for public welfare and religious purposes
• Financial Institutions: Scheduled and Non-scheduled banks, Nationalised Banks, Co-operative Banks, State Financial Corporations, and Industrial Development Banks

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Eligibility Criteria

KVIC loan can be availed by the following entities:

• Individuals of minimum 18 years of age with 8th class pass certificate
• Self-Help Groups (SHGs)
• Registered and Co-operative Societies
• Charitable Trusts and many more entities

How to avail MSME loans from Banks under the KVIC scheme

KVIC is Khadi and Village Industries Commission under which there are several funding schemes/programs through which business or working capital loans are offered by the public and private sector banks to eligible borrowers.

Some of the leading schemes that fall under KVIC include the Prime Minister’s Employment Generation Programme (PMEGP), Scheme of Fund for Regeneration of Traditional Industries (SFURTI), Interest Subsidy Eligibility Certificate (ISEC), Market Promotion Development Assistance (MPDA), Khadi Reform and Development Programme (KRDP), Beekeeping – The Honey Mission and Market Development Assistance (MDA).

The objectives, functions, features, and eligibility of each scheme or program vary from one another.

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Schemes under Khadi and Village Industries Commission (KVIC) – 2023

1) Prime Minister’s Employment Generation Programme (PMEGP)

Prime Minister’s Employment Generation Programme (PMEGP) was launched in 2008 to replace The Rural Employment Generation Programme (REGP) scheme. The Ministry of MSME launched PMEGP which is a credit-linked subsidy program. The prime reason for launching this scheme is to create employment in rural and urban areas across the nation.

Under PMEGP, the beneficiaries are required to invest their own contribution of a certain percentage of the project cost to avail subsidy. Mentioned below is a tabular representation of the amount required to be deposited by the beneficiaries:

Levels of Funding under PMEGP

Notes:

• The maximum cost of the project/unit admissible under the manufacturing sector is Rs. 50 lakh
• The maximum cost of the project/unit admissible under the business/service sector is Rs. 20 lakh
• The balance amount of the total project cost will be provided by Banks as a term loan

2) Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

Launched in 2005, SFURTI is a Scheme of the Fund for Regeneration of Traditional Industries Ministry of MSME. The primary objective of SFURTI is to organize the traditional artisans and industries into groups to make them competitive and provide them with long-term sustainability. The financial support provided under SFURTI for any specific project shall be subject to a maximum of Rs 8 crore. Institutions of the Central and State Governments and semi-Government institutions, Non-Government organizations (NGOs), Panchayati Raj institutions (PRIs), etc. can apply for this scheme.

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Read: SFURTI Scheme – Funding Details, Objective and Full Form

3) Interest Subsidy Eligibility Certificate (ISEC)

The Interest Subsidy Eligibility Certificate (ISEC) Scheme is the major funding source for the Khadi program. This scheme is applicable to all registered institutions of KVIC. This scheme was introduced to mobilize funds from banking institutions to bridge the gap between the actual fund requirement and its availability from budgetary sources. Under this scheme, funding is provided at a concessional rate of interest of 4% per annum for working capital purposes as per the requirements.

4) Market Promotion Development Assistance (MPDA)

Market Promotion Development Assistance (MPDA): This scheme is launched to provide services like market promotion and development assistance for Khadi industries.  The aim of this scheme is to ensure increased earnings for artisans.

Under the former MDA scheme, financial assistance was distributed amongst Artisans (25%), selling institutions (45%), and producing Institutions (30%). It goes 20% for selling institutions and 40% for both artisans and producing institutions.

5) Khadi Reform and Development Programme (KRDP)

Khadi Reform and Development Programme (KRDP) is formed for employment generation, to enhance the earnings of artisans, and to ensure the positioning of Khadi considering the present needs of the Khadi industry. The main focus of this scheme is on Repositioning Khadi and linking to market requirements, providing selective subsidy and enhanced remuneration.

6) Beekeeping – The Honey Mission

Honey Mission aims to improve the livelihoods of rural communities. It works around five dynamics that include:

• It’s an income-generating activity
• Medicinal and food value of honey
• Supports agricultural activities
• Contributes to forests conservation efforts
• Facilitates healthy linkages between biodiversity toward sustainable livelihoods

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7) Market Development Assistance (MDA)

MDA scheme is promotion assistance for the development of Khadi which is paid at 20% on the production. Approximately 25% of MDA is paid to the institution of which 25% is given to artisans as an incentive and 30% is offered to institutions for production and 45% for marketing purposes. Under the MDA scheme, financial assistance of 25% is reserved for payment among weavers and spinners as an additional incentive through their post/bank office account.

KVIC also implements various other promotional activities for the development of different village industries, such as handmade paper, polymer, agro and chemical-based, bee-keeping, and other forest-related activities. KVIC loans are offered by various financial institutions at attractive interest rates.

Just after its establishment, KVIC took over All India Khadi and Village Industries Board. KVIC operates via its network of zonal offices located in Delhi, Bhopal, Bangalore, Kolkata, Mumbai (HO), and Guwahati.

KVIC Financial Year 2022-2023

Source: https://dashboard.msme.gov.in/khadi.aspx    (Updated as on Jan 2023 & Data provided up to 31st Aug 2022)

KVIC Financial Year 2020-2021 & 2021-2022

Source: https://dashboard.msme.gov.in/khadi.aspx    (Updated as on Jan 2023)

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FAQs 

Q. Where the beneficiary has to submit his/her application or project?
Ans. The beneficiary can submit his/her application or project online by visiting KVIC’s official website: www.kvic.org.in or kviconline.gov.in/pmegpeportal/

Q. What is a Village Industry?
Ans. A Village Industry is an industry that is located in the rural areas of a state or a country with limited resources. People living in villages or rural areas produce goods and offer services related to micro and small businesses. The capital investment is limited or sometimes fixed for the workers or artisans. The earnings of workers or artisans are often daily wages.

Q. Whether any collateral or security mandatory for a borrower to submit to the bank or lender?
Ans. No, collateral or security is not required by banks offering loans for any scheme that comes under KVIC.

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