Sarkari Yojana
Interest Subvention Scheme
About Interest Subvention Scheme
The Government of Karnataka has brought in the “Interest Subvention Scheme” for new and existing profit-making micro and small manufacturing enterprises and for enterprises in manufacturing-allied activities. Delivered through the Karnataka State Financial Corporation (KSFC), it aims to make institutional credit for capital investment available at reasonable interest rates.
Scheme Overview
State Government
Karnataka State Financial Corporation
Business Entity, Individual
Scheme Details
Eligibility Requirements
To qualify for Interest Subvention Scheme, applicants must satisfy the following conditions:
Enterprises may be promoted by any category of…
Enterprises may be promoted by any category of borrower, including proprietary concerns, partnership firms, companies & other legal entities.
All new investment in building, plant and machinery…
All new investment in building, plant and machinery used directly in production qualifies, whether by new enterprises or by existing ones through expansion, diversification, modernisation, technology up-gradation etc., with the gross block of plant and machinery taken into account.
Land bought from KIADB / KSSIDC or other…
Land bought from KIADB / KSSIDC or other govt. agencies is not covered.
Units that have already received interest subsidy under…
Units that have already received interest subsidy under another scheme of Government of Karnataka / Government of India are excluded.
Interest subvention of 5.5% p.a
Interest subvention of 5.5% p.a. is available for no more than five years from the first disbursement of each loan, even where repayment runs past five years.
Activities covered under this scheme:
Agro & Food Processing, Textile, Ready-made Garments, Engineering, Automobiles, Electrical & Electronics, Paper & Paper Products, Printing & Publishing, Telecommunications, Software & IT related and Wood based activities.
Terms and Conditions:
Promoters' contribution, DER, Security requirement, project viability and other sanction terms will follow the Corporation's current lending policy.
Benefits Provided
Interest Subvention Scheme provides the following benefits to eligible applicants:
Amount of Loan:
Loans begin at ₹5.00 lakhs
Loans begin at ₹5.00 lakhs.
Micro and Small Manufacturing Enterprises can borrow up…
Micro and Small Manufacturing Enterprises can borrow up to ₹500.00 lakhs.
Manufacturing and allied services enterprises are limited to…
Manufacturing and allied services enterprises are limited to ₹200.00 lakhs for building and the gross block of plant and machinery used directly in production. Any loan above these limits is charged the contract rate of interest. Rate of Interest:
Loans are sanctioned by KSFC at the prevailing…
Loans are sanctioned by KSFC at the prevailing contract rate, and promoters pay interest on that basis. The borrower / beneficiary must keep up regular repayment on every loan the Enterprise has from KSFC to receive the subvention. What the borrower effectively pays is the contract rate minus the 5.5% p.a. subvention reimbursed by Government of Karnataka. Interest Subsidy [Subvention] Period:
Subvention lasts 5 years from the first loan…
Subvention lasts 5 years from the first loan disbursement, even when repayment continues past 5 years.
Documents Required
Applicants should keep the following documents ready before starting the application:
Photo (passport size)
Photo (passport size)
Certificate of registration
Certificate of registration
PAN Card
PAN Card
Audited financial statements (when an existing unit is…
Audited financial statements (when an existing unit is expanding)
Bank account details where the loan will be…
Bank account details where the loan will be paid
Other documents KSFC asks for while processing the…
Other documents KSFC asks for while processing the loan
How to Apply
Offline Application
Applicants can apply for Interest Subvention Scheme through the offline application process outlined below.
Call at the Branch Office Untitled-1 in office…
Call at the Branch Office Untitled-1 in office hours and collect a printed application form in the prescribed format from the staff assigned to issue and receive applications.
Fill in the mandatory fields and attach copies…
Fill in the mandatory fields and attach copies of all mandatory documents, with self-attestation where asked.
Return the completed, signed form and documents to…
Return the completed, signed form and documents to the Branch Office.
Get a receipt or acknowledgment from the receiving…
Get a receipt or acknowledgment from the receiving authority, and make sure it records the submission date and time and a unique identification number (if applicable).
Exclusions / Who Is Not Eligible
**Enterprises / Activities not covered under the Scheme:**
1. Enterprises promoted by SC/ST and Women Entrepreneurs which have availed interest subsidy in any other scheme/s of State Government / Government of India.
1. Refinancing / takeover of loans from other Bank/s, NBFCs / NSIC/ private financiers and Financial Institutions or for conversion of earlier loans/s available from KSFC.
1. All infrastructure projects, Kalyana Mantapas, Hotels, Lodges, Restaurants, Guest Houses, Hospitals, Nursing Homes Housing and Commercial buildings / Commercial Real Estate (CRE) etc.,
1. Business / Trading Activities.
1. Malls, Cinema Houses etc.,
1. Transports Vehicles, Construction equipment etc.,
1. Industrial activities / enterprises not eligible for incentives and concessions as per annexure-2 of Karnataka Industrial Policy 2020-25 or the subsequent Industrial Policy in force.
1. Any other activity other than manufacturing which is not specifically mentioned herein.
1. Gross block means the total original purchase / invoice value of all existing machinery used in production activity including self-acquired, Bank / KSFC financed etc., plus the proposed machinery within overall limit of ₹500.00 lakhs as per definition of Small-Scale Enterprise in MSMED Act, 2006.
Official Application & Website
Verify the latest eligibility, dates and instructions before applying.