Indian Bank MSME Loan

Indian Bank MSME Loan

If you are looking for an improvement of your business or thinking of starting a micro business, then it will be a wise decision to opt for an MSME loan. MSME loans are unsecured loans which are defined by RBI as loans for those businesses who need financial support, infrastructure support, etc. Indian Bank is one of the major banks that has been lending MSME loans to the needed.

List of Indian Bank MSME Loan

Here is the list of schemes provided by Indian Bank MSME Loan

• IB Vidhya Mandir
• IB My Own Shop
• IB Doctor Plus
• IB Contractors
• Tradewell
• IND SME Secure
• IND MSME Vehicle
• IB Micro
• IND SME Mortgage
• IND SME E-Vahaan

IB Vidhya Mandir

Reputed educational institutions can apply for this scheme for the purpose of buying new equipment, or the construction of strong buildings with RCC (reinforced cement concrete roofing). The features of this scheme are

Term Loan: IB Vidhya Mandir scheme can be taken as a term loan so that the customer can repay the loan within a stipulated period of time. This scheme gives the customer a maximum repayment period of 120 months which includes the moratorium period.

Loan Amount: Under this scheme, the bank allows the customer a maximum of 3 crores as the loan amount.

Margin: The promoter’s contribution is required under this scheme. The promoter’s contribution is a certain percentage of the loan amount which the bank wants the lender to invest. For IB Vidhya Mandir scheme, the customer will not have to give the promoter’s contribution for up to Rs 2 lakhs. For above 2 lakhs, the customer will have to invest 10 % on the cost of equipment and on the estimated cost of the building they have to invest 25 %.

Security: Up to Rs 2 lakhs, the business has to give hypothecation of those assets bought out of loan or a personal guarantee of promoters.

IB My Own Shop

This scheme can be applied by individuals, registered partnership firms, professional and self-employed, private and public limited companies which are in the business for at least 3 years. The loan can be made available for purchasing or constructing commercial shop for business purposes, to renovate the existing space. The life of the space or building must not fall below the repayment period plus 2 years. The features of this scheme are

Term Loan: The customer can apply for this loan as a term loan and can repay it within the time period given by the bank. The bank gives a maximum of 120 months as repayment period in which 12 months will be the moratorium period.

Loan Amount: Under this scheme, the bank can give a maximum of Rs 50 lakhs as the loan amount.

Promoter’s Contribution: Under this scheme, the promoter’s contribution or the margin should be 25 %.

Security: As security, the customer should give an equitable mortgage on the commercial property that is going to be purchased, and in individual capacity the personal guarantee of partners, or directors.

IB Doctor Plus

This scheme mainly aims for professional doctors. It could be individuals, registered partnership firms, trusts, etc. The main purpose of this scheme is to help the doctors set up a clinic, nursing homes, clinic cum residence, hospital, medical stores, pathological labs, purchase of ambulances, etc. The scheme can also be used for the modernization, renovation, or expansion of the current clinic or hospital. The key features of this scheme are

Term Loan: This loan is a term loan where the customer can repay the same within the time period allowed by the bank. For this scheme, the bank will allow 120 months including the moratorium period.

Loan Amount: The bank can give a minimum of Rs 1 lakh as loan amount under this scheme. There is no maximum limit set for the loan amount.

Margin: The promoter’s contribution in an urban area would be 10% for loans up to Rs 5 lakhs, and for above 5 lakhs, the contribution should be 20%. For business in rural and semi-urban areas, the promoter’s contribution will be 15% irrespective of the loan amount.

Security: For loans up to Rs 10 lakhs, the customer should give security in the form of hypothecation of those assets bought out of loan, third party guarantee, or coverage under credit guarantee scheme as per CGTMSE. For loans above Rs 10 lakhs, the customer should give the hypothecation of assets bought out of the loan, collateral security in the form of assignment of LIC policy, mortgage of immovable property, pledge of NSCs, etc.

IB Contractors

This scheme targets for well-established contractors such as civil, electrical, mechanical, etc. and who are working within the contracts of central, state, corporates, and reputed PSU for not less than 3 years and have been earning profit for at least 2 years. The purpose of this scheme is to perform the work orders from the state, central, corporates, and reputed PSUs. The features of this scheme are as follows

Loan Nature: The contractors can avail the loan in the form of

• Bank Guarantee
• Term Loan
• Letter of credit
• Discounted Bills for working capital needs
• For working capital requirements, the loan can be taken as secured overdraft against an immovable property where the maximum limit is 50% of the same property.

Loan Amount: The bank can allow a minimum of above 10 lakhs and a maximum of Rs 5 crores as the loan amount. The bank gives 84 months as repayment period including moratorium.

Margin: The contractors should give the promoter’s contribution as

• 15 % of the bills discounted
• 20 % of the equipment cost bought out of the loan
• 10 % cash margin for a letter of credit/ bank guarantee

Security: As security, the customer should provide the following

• If taken as a term loan, then hypothecation of the assets bought out of the loan
• If taken as secured overdraft, then a minimum value of 200 % of the equitable mortgage of property
• If taken as a bank guarantee, then cash margin by pledging the fixed asset receipt
• If taken as a letter of credit, then cash margin by pledging the fixed asset receipt
• The uncovered cash margin portion should be covered with securities such as LIC policy, NSC, etc
• If taken as bills discounted, then the undertaking from the debtors to pay the bank.

Tradewell

This scheme aims for traders or trading enterprises with at least 3 years’ experience in the trade. The main objective of this scheme is to meet the working capital needs and to buy the equipment required for the trading concern. The features of this scheme are

Loan Nature: The customer can take the loan as a term loan for buying equipment. For working capital requirements, the loan can be given as open cash credit, bank guarantee, letter of credit, secured overdraft, bills discounting, etc.

Loan Amount: The bank can give a minimum of Rs 0.10 crores, and a maximum of Rs 5. Crores. The secured overdraft amount for working capital requirement is Rs 2.00 crores. For term loan, the bank will allow 60 months as the repayment period, which includes the moratorium period of 6 months.

Margin: For term loan, the promoter’s contribution would be 25 % on the equipment cost. For working capital, the margin would be 15 % on stock and book debts.

Security: The security given by the customer is

• For open cash credit, the security will be in the form of stock and book debts.
• For term loan, hypothecation of those equipments bought out of the loan.
• For secured overdraft, up to Rs, .50 crores will be an immovable property having at least 150% value of the loan amount or KVP/NSC having at least 112 % value of the loan amount.
• For secured overdraft above Rs .50 crores till 2.00 crores will be an immovable property having at least 166.67% value of the loan amount or KVP/NSC having at least 133.34 % value of the loan amount.
• For secured overdraft, the security will be stocks and book debts.
• For open cash and term loan, any tangible security or immovable property with a minimum value equal to the loan amount.

IND SME Secure

This scheme is for Micro, Small, and Medium enterprises in the manufacture and servicing sector. The purpose of the scheme is to provide term loan for the purchase of machinery, and construction of buildings and to provide working capital. The main features of this scheme are

Loan Nature: The bank can allow the loan as a term loan, letter of credit, bank guarantee, secured overdraft, bills purchase, open cash credit, packing credit, etc.

Loan Amount: The bank can give a minimum of Rs 10 lakhs and there is no maximum limit set. The repayment period allowed by banks for term loan is 120 months.

Margin: The promoter’s contribution to this scheme is as below

• 25 % on book debts and stocks
• In the case of new machinery, 25 % on plant & machinery and in the case of second-hand machinery 50%
• 30 % on building construction estimate

Security: The customer should provide security in the form of

• For working capital hypothecation of book debts and stocks
• Hypothecation of assets bought out of the loan
• Pledging liquid securities such as RBI Bond, LIC policy, etc. or mortgage of immovable property.

IND MSME Vehicle

The target group of this scheme is the existing customers of micro, small, and medium enterprise with or without credit facilities as per the future cash flows and successfully operated and maintained accounts for at least one year. The applicant can be a partnership firm, a public limited company, a private limited company, or a limited liability partnership firm. The purpose of this scheme is to provide financial assistance in buying light or heavy motor vehicles for the current MSME units. The features are as follows

Loan Nature: The bank gives the loan as a vehicle loan to the customers.

Loan Amount: The bank can give a maximum of Rs 2.00 crores as the loan amount. The repayment period will be 60 EMIs for light motor vehicle and in case of a heavy motor vehicle, it would be 60 months including moratorium of 3 months maximum.

Margin: The promoter’s contribution under this scheme would be 15 % of the on-road price of the vehicle.

Security: The customer will have to provide the security as hypothecation of the vehicle bought out of the term loan. As additional security, they can give coverage under CGTMSE.

IB Micro

The scheme targets all micro units including existing units and fresh units with a good track record. The purpose of the scheme is to provide term loan requirement along with working capital .The features are as follows

Loan Nature: The bank allows the loan under this scheme as a composite loan.

Loan Amount: The bank allows a maximum of Rs 20 lakhs as a loan under this scheme. The customer should repay the loan within 60 EMI’s

Security: As security, the customer should provide the assets bought out of the loan and Coverage under CGTMSE.

IND SME Mortgage

The target group for this scheme would be all micro, small, and medium enterprises as defined by the Government of India. The purpose of this scheme would be helping genuine business needs. The features of the scheme are as follows

Term Loan: This loan is a term loan where the customer can repay the same within the time period allowed by the bank. For this scheme, the bank will allow 120 months.

Loan Amount: The minimum loan amount for the new borrower is more than Rs 10 lakhs and for existing borrower its Rs 1 lakh. The maximum loan amount is Rs 500 lakhs.

Margin: The promoter’s contribution will be 40 % of the security value.

Security: As security, the customer shall give Immovable property such as factory land, factory buildings, commercial properties, etc.

IND SME E-Vahaan

This scheme targets all micro, small, and medium enterprises. The purpose of this scheme is to support buying 2/3/4 electric vehicles for business purposes. The features of the scheme are as below

Term Loan: This loan is a term loan where the customer can repay the same within the time period allowed by the bank. For 2/3 wheeler, the repayment period is maximum 48 EMIs and for 4 wheelers it is maximum 60 EMIs.

Loan Amount: The bank will give 85 % of the on-road price of the vehicle as the loan amount.

Margin: The promoter’s contribution will be 15 % of the on-road price of the vehicle.

Security: As security, the customer should hypothecate the vehicle bought out of the loan.

• On the vehicle registration certificate bank’s lien should be marked.
• Coverage under CGTMSE scheme up to Rs 2 crore for manufacturing and service unit. For the trade sector, the coverage will be up to Rs 1 crore.
• If the loan limit is beyond CGTMSE coverage, then liquid securities should be provided for uncovered portion.
• No security required for medium enterprises for a loan up to Rs 25 lakhs. Above that, it would be 100 % collateral security in the form of immovable property.

Eligibility Criteria of Indian Bank MSME Loan

There are no eligibility criteria for Indian Bank MSME Loan

Documents Required for Indian Bank MSME Loan

• Proof of identity such as voter’s ID card, PAN card, Passport, Driving license, etc
• Proof of residence such as electricity bills, telephone bills, passport, etc
• Business addresses
• Rent agreement, if it is a business
• Photocopies of lease deeds, sanction letters from existing banks
• Projected balance sheet for the next two years
• Copy of VAT

Application Procedure of Indian Bank MSME Loan

You can apply for the MSME loan through the bank’s official site or you can visit Indian Bank branch near you.

FAQs on Indian Bank MSME Loan

1. What are the service charges under IND MSME Vehicle?

For light motor vehicle there will be a processing charge of Rs 5000 maximum and for a heavy motor vehicle, it will be Rs 10,000.

2. What is the interest rate under IND MSME Vehicle?

For a light motor vehicle, the interest rate is MCLR (1 year) + 1 % For Heavy motor vehicle, the interest rate is MCLR (1 Year) + 1.25 %

3. What is the meaning of the letter of credit?

A letter of credit is a payment mechanism used in business as an economic guarantee from a bank to a business person.

4. What is a bank guarantee?

A bank guarantee is a type of guarantee in which the lending institution assures that the liabilities of the debtor will be met.

5. What do you mean by hypothecation?

When an asset is purchased out of a loan by a customer, that asset will be pledged to the bank as collateral security. This practice is called hypothecation.