SYLLABUS

GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. Inclusive growth and issues arising from it. 

Context: The Union Cabinet has approved the continuation of the Stand-Up India Scheme for five years, up to 31 March 2031, targeting financial assistance to an additional 2.5 lakh entrepreneurs from women, Scheduled Castes (SCs) and Scheduled Tribes (STs). 

More on the News

• Cabinet Approval: The scheme has been extended for five years, with an approved Credit Guarantee Corpus of ₹4,111 crore.

• Additional Beneficiaries: It aims to provide financial assistance to at least 2.5 lakh additional entrepreneurs during the extended period.

• Credit Guarantee Framework: The revised framework provides 85% guarantee coverage of the loan amount, with a standard guarantee fee of 0.50%.

Understanding the Stand-Up India Scheme

• Launch and Nodal Ministry: Launched on 5 April 2016; implemented by the Department of Financial Services, Ministry of Finance.

• Objective: Promote entrepreneurship among women and SC/ST communities by facilitating institutional credit for setting up greenfield enterprises.

• Eligible Borrowers: Women and SC/ST entrepreneurs above 18 years of age. For non-individual enterprises, at least 51% of the shareholding and controlling stake should be held by an eligible woman or SC/ST entrepreneur.

• Branch-Level Coverage: The scheme aims to facilitate at least one loan to an SC/ST borrower and one to a woman borrower per Scheduled Commercial Bank branch.

• Nature and Quantum of Loan: Composite loan (working capital and term loan) or term loan above ₹10 lakh and up to ₹1 crore, covering up to 85% of the project cost.

• Eligible Activities: Greenfield enterprises in manufacturing, services, trading and activities allied to agriculture.

• Repayment and Contribution: Repayment period of up to seven years, including a moratorium of up to 18 months. The borrower is required to contribute at least 10% of the project cost from own funds.

• Institutional Support: Scheduled Commercial Banks provide loans, while the Stand-Up Mitra portal facilitates handholding and connects prospective entrepreneurs with relevant institutions. 

Performance and Significance

• Credit Outreach: More than 2.75 lakh women and SC/ST entrepreneurs have received loans since the scheme's launch.

• Financial Performance: By March 2025, cumulative loans sanctioned under the scheme had reached ₹61,020.41 crore.

• Financial Inclusion: Facilitates access to formal institutional credit for communities that have traditionally faced barriers to entrepreneurship.

• Inclusive Entrepreneurship: Encourages enterprise creation, self-employment and livelihood opportunities by increasing the participation of women and SC/ST communities in economic activity. 

Challenges in Accessing Institutional Credit

• Creditworthiness and Own Contribution: First-generation entrepreneurs may face difficulties in establishing credit history, meeting lending requirements and arranging their own contribution.

• Entrepreneurial Preparedness: Limited financial literacy, business experience and project-planning capabilities can constrain the establishment of viable enterprises.

• Market Linkages: Access to markets, technology, mentoring and business networks remains important for the sustainability of newly established enterprises.

• Enterprise Sustainability: Loan sanction and disbursement alone do not ensure long-term business viability; continued support is required beyond the initial financing stage.

Way Forward

• Strengthen Handholding: Expand entrepreneurship training, financial literacy, mentoring and assistance in preparing viable project proposals.

• Improve Credit Access: Simplify application procedures and strengthen coordination between banks and credit-guarantee institutions.

• Develop Market Linkages: Facilitate access to technology, digital platforms, procurement opportunities and wider market networks.

• Monitor Outcomes: Track enterprise survival, employment generation, repayment performance and business expansion beyond loan disbursement.