Canara Bank has a number of finance schemes for the benefit of the micro, small and medium-sized units (MSMEs) in the country, across different industries. The bank offers finance to MSMEs to meet their capital expenditure, for their working capital requirements, as well as for other purposes.
The following are the major schemes offered by Canara Bank to bridge the working capital gap among MSMEs:
Simplified Open Cash Credit (SOCC)
Under this scheme, finance is available to small entrepreneurs who are unable to maintain detailed stock books, for the purpose of working capital. The maximum amount of funds available under this scheme is Rs 5 lakh.
No collateral is required for these loans. The assets created using the credit facility can be offered as prime security.
Open Cash Credit Scheme (OCC)
This scheme makes finance available to MSMEs against stocks and receivables, for the purpose of working capital.
Stocks and receivables are, thus, the prime security in case of such loans. The bank might obtain collateral security in the form of land and building, plant and machinery, and/or personal guarantee as and when required.
Micro financing joint liability groups
The major focus of this scheme is to make finance available to groups of handloom weavers and agarbatti (incense stick) manufacturers, for the purpose of working capital. In order to be eligible for these loans, the groups should consist of five to 10 members.
The maximum limit of finance available under this scheme is Rs 50,000 for individuals, Rs 2 lakh for groups of five members, and Rs 5 lakh for groups of 10 members.
No collateral is required for availing of these loans. The assets created out of the loan funds can be offered as security.
Laghu Udhyami Credit Card Scheme (LUCC)
Finance of up to Rs 10 lakh is made available under this scheme to small units, including retail traders, artisans, village industries, self-employed people and professionals. In order to be eligible for these loans, the borrower should have a satisfactory track record with the bank for at least three years.
No collateral is required for these loans. The stocks or receivables created using the loan funds can be offered as security.
A rate of interest between 10.5 per cent and 11.5 per cent is charged for loans of up to Rs 50,000. The rate of interest is between 12.5 per cent and 13 per cent for funds between Rs 50,000 and Rs 2 lakh. For loans between Rs 2 lakh and Rs 10 lakh, a rate of interest between 12 per cent and 15.75 per cent is charged.