Start ups and its Registration-Best CS Executive Classes

START UP AND ITS REGISTRATION

Few Facts

  • India is the 3rd largest startup ecosystem in the world
  • Till now 28,000+ Startups are recognised by Department for Promotion of Internal Trade and Industry (DPIIT)
  • India is home to 32 UNICORNS (startup) with valuation $1 Billion+ with a combined valuation of $100+ Billion
  • The current median age of founder entrepreneurs lies at only 31 Years
  • 29 States and UTs now have a state startup policy
  • The entire startup ecosystem raised $ 50 Billion funding between 2014-2019
  • On an average 12 jobs created per start-up totalling up to 3, 50,000+ jobs

Startup India Policy

‘Start up India’ initiative was announced by Hon’ble Prime Minister on 15.08.2015. It aims at fostering entrepreneurship and promoting innovation by creating an ecosystem that is conducive to growth of Startup.

which shall provide platform, funds, opportunities and support to start-ups

 

–          Easy access to funds                       –              Protection of IPRs

–          Less legal compliances                   –              Tax exemptions

–          Platform where people with different ideas can meet & intract                

Who is a Startup?
An entity shall be considered as a Startup:

  1. Upto a period of 10 years from the date of incorporation/ registration, if it is incorporated as
    • a private limited company (as defined in the Companies Act, 2013) or
    • registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a
    • limited liability partnership (under the Limited Liability Partnership Act, 2008)in India.
  1. Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded Rs 100 crore.
  2. Entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.

Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’.

Funding and Supporting Incentives

  • Fund of Funds
    For providing fund support for Startups, Government has created a Funds for Startups (FFS) at Small Industries Development Bank of India (SIDBI) with a corpus of Rs 10,000 crore. The FFS shall contribute to the corpus of Alternative Investment Funds (AIFs) for investing in equity and equity linked instruments of various Startups.
  • Startup India Seed Fund
    Government has launched a Startup India Seed Fund worth INR 1000 crore to help startups and support ideas from aspiring entrepreneurs.
  1. Credit Guarantee Fund for Startups
    Since debt funding for Startups is perceived as high-risk activity, a Credit Guarantee Fund for Startups is being setup with a budgetary corpus of Rs.500 crore per year, over the next four years, to provide credit guarantee cover to banks and lending institutions providing loans to Startups.
  1. Relaxed Norms in Public Procurement for Startups
    Provision has been introduced in the procurement policy of Ministry of Micro, Small and Medium Enterprises to relax norms pertaining to prior experience/ turnover for Micro and Small Enterprises.
  1. Tax Incentives
    • Income Tax Exemption on profits under Section 80-IAC of Income Tax (IT) Act
      A deduction of an amount equal to 100% of the profits and gains derived from an eligible business by an eligible startup for 3 consecutive assessment years out of 10 years beginning from the year in which the eligible start-up is incorporated.
    • Tax Exemption on issue of shares above Fair Market Value
      Start-ups are exempt from tax under Section 56(2)(viib) of the Income Tax Act when such a Startup receives any consideration for issue of shares which exceeds the Fair Market Value of such shares.
    • Exemption under Section 54EE in the Income Tax Act, 1961
    • Exemption under Section 54GB of the Income-tax Act
    • Carry forward of losses under Section 79 of Income Tax Act
  2. Legal Support and Fast-tracking Patent Examination at Lower Costs
    A scheme for Startups IPR Protection (SIPP) for facilitating fast track filing of Patents, Trademarks and Designs by Startups has been introduced. The scheme provides for expedited examination of patents filed by Startups. This will reduce the time taken in getting patents. The fee for filing of patents for Startups has also been reduced up to 80%.
  1. Self-Certification based Compliance Regime
    Compliance norms relating to Environmental and Labour laws have been eased in order to reduce the regulatory burden on Startups thereby allowing them to focus on their core business.
    Ministry of Environment and Forests (MOEF) has published a list of 36 white category industries.

    Startups falling under the “White category” would be able to self-certify compliance in respect of 3 Environment Acts.

    • The Water (Prevention & Control of Pollution) Act, 1974;
    • The Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003;
    • The Water (Prevention & Control of Pollution) Act, 1981.

    Further, Ministry of Labour and Employment (MOLE) has issued guidelines to State Governments whereby Startups shall be allowed to self-certify compliance in respect of Labour laws. These shall be effective after concurrence of States/UTs. The Acts are :

      • The Building and Other Constructions Works (Regulation of Employment & Conditions of Service) Act, 1996.
      • The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979.
      • The Payment of Gratuity Act, 1972.
      • The Contract Labour (Regulation and Abolition)) Act, 1970.
      • The Employees Provident Funds and Miscellaneous Provisions Act, 1952.
      • The Employees State Insurance Act, 1948.
    1. Setting up Incubators
      • Incubators are organisations set-up with the specific goal of assisting entrepreneurs with building and launching their startups. Not only do incubators offer a high number of value added services (office space, utilities, admin & legal assistance, etc.), they often also make grants/ debt/ equity investments.
      • Under Atal innovation Mission, Niti Aayog will set up Atal Incubation Centres (AICs) in Public and Private sector. Niti Aayog has received 3658 applications (1719) from academic institutions and 1939 from nonacademic instution) for setting up Atal Incubation Centres (AICs) from both Public and Private sector organizations.
      • Under the Mission, a grant in aid of Rs.10 crore would be provided to scale up an existing incubator for a maximum of 5 years to cover the capital and operational costs in running the centre.
      • Niti Aayog has received 233 applications for providing scale up support for established incubation centres.
    2. Setting up of Startup Centres and Technology Business Incubators (TBIs)
      • 14 Startup Centres and 15 Technology Business incubators are to be set up collaboratively by Ministry of Human Resource Development (MHRD) and the Department of Science and Technology (DST).
      • Out of the 14 Startup Centres, 10 have been approved.
      • Once MHRD releases its share of Rs.25 lakhs each for the Startup centres, the Startup centres would be supported by DST by December, 2016.
      • Against the target of sanctioning 15 TBIs, 9 TBIs have been approved and other 6 TBIs are under process of being approved.
    3. Research Parks
        • 7 Research Parks will be set up as per the Startup India Action Plan.
        • Out of these 7 IIT Kharagpur already has a functional Research Park.
        • Further, DST will establish 1 Research Park at IIT Gandhinagar and the remaining 5 shall be set up by Ministry of Human Resource development (MHRD) at IIT Guwahati, IIT Hyderabad, IIT Kanpur, IIT Kanpur, IIT Delhi and IISc Bangalore.

“Act” means the Income-tax Act,1961;

“Board” means the Inter-Ministerial Board of Certification comprising of the following members: —

  •  Additional Secretary, Department of Industrial Policy and Promotion, Convener
  • Representative of Ministry of Corporate Affairs, Member.
  • Representative of Ministry of Electronics and Information Technology, Member.
  • Representative of Department of Biotechnology, Member.
  • Representative of Department of Science & Technology, Member.
  • Representative of Central Board of Direct Taxes, Member
  • Representative of Reserve Bank of India, Member.
  • Representative of Securities and Exchange Board of India, Member.

Recognition
The process of recognition of an eligible entity as startup shall be as under: —

  1. A Startup shall make an online application over the mobile app or portal set up by the Department of Industrial Policy and Promotion.
  2. The application shall be accompanied by-
    • a copy of Certificate of Incorporation or Registration, as the case may be, and
    • a write-up about the nature of business highlighting how it is working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.
  3. The Department of Industrial Policy and Promotion may, after calling for such documents or information and making such enquires, as it may deem fit,
    • recognise the eligible entity as Startup; or
    • reject the application by providing reasons.

Certification for the purposes of section 80-IAC of the Act
A Startup being a private limited company or a limited liability partnership incorporated on or after 1st day of April 2016 but before 1st day of April 2021 may, for obtaining a certificate for the purposes of section 80-IAC of the Act, make an application in Form-1 along with documents specified therein to the Board and the Board may, after calling for such documents or information and making such enquires, as it may deem fit, —

  • grant the certificate referred to in sub-clause (c) of clause (ii) of the Explanation below sub-section (4) of section 80-IAC of the Act; or
  • reject the application by providing reasons

Approval for the purposes of clause (viib) of sub-section (2) of section 56 of the Income Tax Act
Where a closely held company, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be taxable under the head “Income from Other Sources”

A Startup shall be eligible for exemption from the provisions of this clause, if it fulfils the following conditions:

  • it has been recognised by DPIIT.
  • aggregate amount of paid up share capital and share premium of the startup after issue or proposed issue of share, if any, does not exceed, Rs. 25 crore.
  • It has not invested in any of the following assets,─
    • building or land appurtenant thereto, being a residential house, other than that used by the Startup for the purposes of renting or held by it as stock-in-trade, in the ordinary course of business;
    • land or building, or both, not being a residential house, other than that occupied by the Startup for its business or used by it for purposes of renting or held by it as stock-in trade, in the ordinary course of business;
    • loans and advances, other than loans or advances extended in the ordinary course of business by the Startup where the lending of money is substantial part of its business;
    • capital contribution made to any other entity;
    • shares and securities;
    • a motor vehicle, aircraft, yacht or any other mode of transport, the actual cost of which exceeds 10 lakh rupees, other than that held by the Startup for the purpose of plying, hiring, leasing or as stock-in-trade, in the ordinary course of business;
    • jewellary other than that held by the Startup as stock-in-trade in the ordinary course of business;
      Provided the Startup shall not invest in any of the assets specified above for the period of 7 years from the end of the latest financial year in which shares are issued at premium;

EXEMPTIONS FOR STARTUPS

To promote growth and help Indian economy, many benefits are being given to entrepreneurs establishing startups

  1. Simple process
    Government of India has launched a mobile app and a website for easy registration for startups. Anyone interested in setting up a startup can fill up a simple form on the website and upload certain documents. The entire process is completely online.
  1. Reduction in cost w.r.t Intellectual Property Right
    The government also provides lists of facilitators of patents and trademarks. They will provide high quality Intellectual Property Right Services including fast examination of patents at lower fees. The government will bear all facilitator fees and the startup will bear only the statutory fees. They will enjoy 80%reduction in cost of filing patents.
  1. Easy access to Funds
    A 10,000 crore rupees fund is set-up by government to provide funds to the startups as venture capital. The government is also giving guarantee to the lenders to encourage banks and other financial institutions for providing venture capital.
  1. Tax holiday for 3 Years
    Startups will be exempted from income tax for 3 years provided they get a certification from Inter-Ministerial Board (IMB).
  1. Apply for tenders
    Startups can apply for government tenders. They are exempted from the “prior experience/turnover” criteria applicable for normal companies answering to government tenders.
  1. R&D facilities
    Seven new Research Parks will be set up to provide facilities to startups in the R&D sector.
  1. No time-consuming compliances
    Various compliances have been simplified for startups to save time and money. Startups shall be allowed to self-certify compliance (through the Startup mobile app) with 9 labour and 3 environment laws.
  1. Tax saving for investors
    People investing their capital gains in the venture funds setup by government will get exemption from capital gains. This will help startups to attract more investors.
  1. Choose your investor
    The startups will have an option to choose between the VCs, giving them the liberty to choose their investors.
  1. Easy exit
    In case of exit, a start up can close its business within 90 days from the date of application of winding up

Exemptions under Income Tax Act w.r.t Startups

  1. The startups recognized under the Startup India policy can claim tax benefits in 3 out of the first 10 years under Section 80-IAC of the Income-tax Act, 1961.
  2. Exemption from tax on Long-term capital gains on investment (upto 50 Lakhs) in the units of a specified fund (to finance start-ups in India) (Section 54EE of Income Tax Act)
  3. Tax exemption to Individual/HUF on investment of long-term capital gain in equity shares of Eligible Startups (Section 54GB of Income Tax Act)
  4. Tax exemption under Section 56(2)(viib) of Income Tax Act, 1961 (w.r.t Securities Premium above fair market price)

Tax incentives for start-ups [Section 54EE]
Investment of Long-term Capital Gains in units of a specified fund (to finance start-ups in India)

  • Within 6 months from date of transfer
  • Maximum Investment Allowed is INR 50,00,000

In such case, the entire LTCG or amount invested in the bonds, whichever is lower, is exempt.

Units so acquired should not be transferred for a period of 3 years, and if that does happen before 3 years, the capital gain exempted earlier shall be taxed as long-term capital gain in that year.

Capital Gain on Transfer of Residential House Property [Section 54GB]

Who can claim exemption?

An Individual or a Hindu undivided family.

Which specified asset is eligible?

On transfer of a long term residential property (a house or a plot of land) if transfer takes place during April 1, 2012 and March 31, 2017. (till 31st March 2022 in case of eligible start up)

Which asset the taxpayer should acquire to get benefit of exemption?

Equity shares in an eligible company (includes a company which qualifies to be a small or medium enterprise under the Micro, Small and Medium Enterprises Act, 2006 (27 of 2006) or is an eligible start-up) – Eligible Start Up is defined under Section 80-IAC

What is the time-limit for acquiring the new asset?

Equity shares in an “eligible company” should be acquired on or before the due date of furnishing of return of income under section 139(1).

The “eligible company” should utilize this amount for the purchase of a “new asset” within one year from the date of subscription in equity shares.

How much is exempt?

 

Investment in “new asset (new plant and machinery)” by the eligible company. Exemption cannot exceed capital gain.

Benefits/Exemptions to Start-ups under Companies Act, 2013

  1. An amount of 25 lakh rupees or more received by a start-up company, by way of a convertible note (convertible into equity shares or repayable within a period not exceeding 5 years from the date of issue) in a single tranche, from a person shall not be treated as a deposit.
  2. The provisions of clauses (a) to (e) of Section 73(2) of the Act shall not apply to a start-up company for five years from the date of its incorporation. (Clauses (a) to (e) of Section 73(2) specify the conditions for accepting deposits from members)
  3. The upper limit on the acceptance of deposits has been enhanced to 35% of net worth instead of earlier 25%;
  4. Start-ups are allowed to issue Employee Stock Options to promoters working as employees;
  5. The limits with regard to sweat equity that can be issued by a start-up company is increased from 25% of paid up capital to 50% of paid up capital;
  6. The annual return of a start-up company may be signed by the company secretary, or where there is no company secretary, by the director of the company.
  7. For start-ups, convening at least one meeting of the board of directors in each half of a calendar year with the gap between the two meetings of not less than Ninety (90) days is sufficient to meet the requirement of Section 173 (5) of the Act.

DIAGRAM

Funding at Seed Level (Initial Level)
At this level, funds are required to start a business. This capital can come from the founders, families or friends. It is required for the market research, product development, and other initial stage operations.

It is really hard to arrange funds at this level, and these funds shall be utilised very intelligently. These funds are used to develop the products and to recognise the market. At this level business does not produce any profit in real sense. Further, profits may not accrue in the near future. Therefore, one should analyse very carefully about the

  • terms & conditions of raising such funds
  • tenure of such funds
  • risk involved in raising such funds
  • utilisation of such funds
  • dilution of ownership

Funding at Growth and Expansion Level  
Once product is developed and market is recognised, funds are required to convert the business plan into reality.

 Broadly financing can be divided into 2 categories

(a) equity financing; or
(b) debt-financing

Equity Financing
Equity Financing refers to that mode of financing where provider of finance gets the ownership right/controls in the business. It leads to dilution of ownership and management.

For a company form of business, Equity Financing means issuance of

  • Equity Shares or
  • Other Securities which shall be converted into equity shares in the future

A private company can issue securities only through private placement (referred as private equity) but a public company may issue shares through private placement or public issue (IPO).

Startups are usually equity financed/funded by way of a venture capital/ private equity investors and/or angel investors.

Angel Investors
Angel investors are usually individuals or a group of industry professionals who are willing to fund the venture in return for an equity stake. These are individuals, normally affluent, who inject capital for startups in exchange for ownership equity or convertible debt.

Under the SEBI (Alternative Investment Funds) Regulations, 2012, SEBI has made the following restrictions applicable to angel funds investing in an Indian company:

  1. An investee company has to be within 3 years of its incorporation, not listed on the floor of a stock exchange, and should have a turnover of less than INR 250 million and not be promoted by or related to an industrial group (with group turnover exceeding INR 3 billion).
  2. The deal size is required to be between INR 5 million and INR 50 million. Separately, it is required that an investment shall be held for a period of at least 3 years.

Venture Capital/Private Equity Investors
Private equity means investment in the equity (capital) of a company privately. It comes primarily from institutional investors and rich investors, who can dedicate substantial sums of money for extended time periods. In most cases, considerably long holding periods are often required for private equity investments.

Venture capital (VC) is a type of private equity, a form of financing that is provided by firms or funds to small, early-stage, emerging firms that are deemed to have high growth potential, or which have demonstrated high growth (in terms of number of employees, annual revenue, or both).

Upon completion of due-diligence to the satisfaction of investor, such investments involve execution of essentially following transaction documents between the investors and startups:

Funding Procedure

  1. A Term Sheet / Letter of Intent /Memorandum of understanding is entered into, setting out the following:
    • basic commercial understanding between the VC and the startup; and
    • legal terms for the agreements to follow the due-diligence;
  2. The contracting parties will enter into a Share Subscription Agreement/ Debenture Subscription Agreement. It usually captures the following:
    • the issuance of shares in the share capital or debentures at subscription amount determined based on the valuation of the startup;
    • condition precedents to completion of transaction or conditions subsequent to be completed within the agreed time frame after the completion date;
    • sets of representation and warranties and indemnification resulting from due-diligence exercise or otherwise, etc.
  3. Thereafter, the contracting parties may enter into a Shareholders’ Agreement providing for the following
    • Nomination/representation rights on the board of investee;
    • Information and reporting right and disclosure obligation of investee to the investors;
    • Redemption rights on debenture or preference shares;
    • Pre-emption rights, Right of First Refusal or Right of First Offer etc;
    • Exit options to investors after the lock-in-period; etc.
  4. Issuance of Securities through Private Placement process;
  •  
  •  

Debt Financing

Loan from Banks & NBFCs
Loans from banks and NBFCs help finance the purchase of inventory and equipment, besides securing operating capital and funds for expansion. More importantly, unlike a VC or angels, which have an equity stake, banks do not seek ownership in your venture. However, there are several drawbacks of such funding option. Not only do you pay interest on loan but it also has to be done on time irrespective of how your business is faring. They require substantial collateral and a good track record, besides the fulfilment of other terms and conditions and a lot of documentation as follows:

  1. Application for loan sanction by borrowers;
  2. Issue of sanction letter by the Bank;
  3. Agreement of Loan;
  4. Security/collateral documentation, such as
    • Deed of Mortgage;
    • Deed of Hypothecation;
    • Deed of guarantee;
    • Share pledge agreement;

 

External Commercial Borrowings:
External commercial borrowing (ECBs) are loans in India made by non-resident lenders in foreign currency to Indian borrowers. They may be in form of bank loans, buyers’ credit, suppliers’ credit, debt instruments. ECB can be accessed under two routes, viz.,

  • Automatic Route; and
  • Approval Route

depending upon the category of eligible borrower and recognized lender, amount of ECB availed, average maturity period and other applicable factors.

CGTMSE Loans:
Under the Credit Guarantee Trust for Micro and Small Enterprises scheme launched by Ministry of Micro, Small & Medium Enterprises (MSME), Government of India to encourage entrepreneurs, one can get loans of up to 1 crore without collateral or surety. Any new and existing micro and small enterprise can take the loan under the scheme from all scheduled commercial banks and specified Regional Rural Banks, NSIC, NEDFi, and SIDBI, which have signed an agreement with the Credit Guarantee Trust.

Unconventional modes of financing

Crowd Funding
This is recent phenomena being practiced for getting seed funding through small amounts collected from a large number of people (crowd), usually through the Internet. Now we have companies existing in India which are specializing in “Crowd Funding”.

The entrepreneur can get money for his venture by showcasing his idea before a large group of people and trying to convince people of its utility and success.

The entrepreneur needs to put up on a portal his profile and presentation, which should include the business idea, its impact, and the rewards and returns for investors. It should be supported by suitable images and videos of the project.

Incubators
These set-ups precede the seed funding stage and help the entrepreneur develop a business idea or make a prototype by providing resources and services in exchange for an equity stake ranging from 2-10%.

Incubators offer office space, administrative support, legal compliances, management training, mentoring and access to industry experts as well as to funding through angel investors or VCs.

These are usually government-supported institutes like the IIMs or IITs, technical institutes or private business incubators run by industry veterans or companies. The incubation period can be 2-3 years and admission is rigorous.

Some of the top options in India include IIM-Bangalore NSRCEL, Microsoft Accelerator and IIT-Kanpur, SIIC and the Sriram College of Commerce (SRCC).

MUDRA BANKS

The Union Budget presented by the Hon’ble Finance Minister Shri Arun Jaitley, for FY 2015-16, announced the formation of MUDRA Bank. Accordingly MUDRA was registered as a Company in March 2015 under the Companies Act 2013 and as a Non-Banking Finance Institution with the RBI on 07 April 2015. MUDRA was launched by the Honourable Prime Minister Shri Narendra Modi on 08 April 2015 at a function held at Vigyan Bhawan, New Delhi.

MUDRA has been initially formed as a wholly owned subsidiary of Small Industries Development bank of India (SIDBI) with 100% capital being contributed by it. Presently, the authorized capital of MUDRA is 1000 crores and paid up capital is 750 crore, fully subscribed by SIDBI. More capital is expected to enhance the functioning of MUDRA.

This Agency would be responsible for developing and refinancing all Micro-enterprises sector by supporting the finance Institutions which are in the business of lending to micro/small business entities engaged in manufacturing, trading and service activities. MUDRA would partner with Banks, MFIs and other lending institutions at state level / regional level to provide micro finance support to the micro enterprise sector in the country.

Micro Finance is an economic development tool whose objective is to provide income generating opportunities to the people at the bottom of the pyramid. It covers a range of services which include, in addition to the provision of credit, many other credit plus services, financial literacy and other social support services.

The bank will classify its clients into three categories and the maximum allowed loan sums will be based on the category:

  • Shishu: Allowed loans up to Rs. 50,000 (US$780)
  • Kishore: Allowed loans up to Rs. 5 lakh (US$7,800)
  • Tarun: Allowed loans up to Rs. 10 lakh (US$16,000)

What kind of borrowers are eligible for assistance from mudra?
Non–Corporate Small Business Segment (NCSB) comprising of millions of proprietorship / partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits / vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.

The basic criteria of age should be 18 years old. Loan under the scheme of the Pradhan Mantri Mudra Bank Loan will be available if and only if it is for commercial and business purposes and not for personal purposes. At the most, borrower can buy vehicle from mudra loan, given that it is used for commercial purposes

Procedure for loan
MUDRA Bank is not a separate bank (like SBI etc). It is a government financing scheme to provide business loan to new small businesses in India.

Once the beneficiary identifies an idea and comes up with a business plan, he is supposed to select the business category under which he wishes to avail the loan (Shishu, Kishor or Tarun).

The beneficiary can contact the nearest Public/ Private sector bank where he/ she can apply for business loan under Prime Minister Mudra Yogna (PMMY). The list of institutions partnering in the MUDRA initiative is available on the MUDRA portal (https://www.mudra.org.in).

An application form under this scheme will be available with each of the above listed institutions. This application form has to be submitted along with the following documents for the approval of the loan:

  • Proof of Identity (Self attested Voter ID/ Driving License/ PAN Card/Aadhaar Card/Passport /any other Photo ID issued by Government)
  • Proof of Residence (Recent Telephone Bill/Electricity Bill/Property Tax Receipt (not older than 2 months)/Voter ID Card/Aadhaar Card/Passport/Domicile Certificate/Certificate Issued by a local authority)
  • Applicant’s recent photograph(not older than 6 months)
  • Quotation of Machinery/other items to be purchases
  • Name of the Supplier/Details of Machinery/Price of Machinery
  • Proof of Identity/Address of the Business Enterprise (relevant licenses & certificates)
  • Proof of Category (SC/ST/OBC/Minority etc)

Apart from the above mentioned documents, individual banks could ask for other documents as needed. The Banks are not supposed to take any processing fee and are not supposed to ask for any collateral. The repayment period is also extended to 5 years. But it is also made clear that the applicant should not be a defaulter to any Bank or financial institution.

MUDRA Card
After the loan has been sanctioned under MUDRA Yojana, the candidate will get a MUDRA Card, a card like the credit card which the candidate can use to buy business raw material, etc. Mudra Card will have a limit of 10% of the business loan (subject to Rs. 10,000 maximum).

Leave a Comment