There are both centrally and state assisted interest subsidy scheme to enhance the affordability of formal credit.
As per the state scheme, all commercial and cooperative banks that are prepared to lend to Kudumbashree NHGs under the linkage banking programme at 9% or below, will be participants in the scheme. The CDS would be raising the claim with the banks and the amount would be dispersed to a designated nodal branch by Kudumbashree State Mission in the case of commercial banks and to the concerned cooperative banks/societies by the district missions in the case of cooperative institutions. The interest subsidy would be provided as annual installments to the banks. One highlight of the scheme is the inclusion of joint liability groups for farming in the ambit of the scheme. Around 10099 groups (1737 Joint Liability Groups and 8362 Neighborhood Groups) have benefited from the scheme. Kudumbashree Mission has been able to disburse Rs. 989 Crore under this scheme to various NHGs and JLGs.
Under NRLM( Central Scheme) Interest subvention program all women NHGs in category 1 districts namely Palakkad ,Malappuram, Idukki and Wayanad are eligible for interest subvention on credit upto Rs. 3 lakhs at 7% per annum. Further, these NHGs will be provided with an additional 3% subvention on the prompt repayment of loans.
For category II districts, all Kudumbashree NHGs in rural area are eligible for interest subvention to avail the loan facility at an interest rate of 7%. Here Banks will charge the SHGs as per their respective lending norms and the difference between the lending rates and 7% subjected to a maximum limit of 5.5% will be subvented in the loan accounts of the NHGs by Kudumbashree with the support of NRLM Fund.