Loans under the scheme are sanctioned free of interest and need to be repaid in five years in 48 instalments with repayment exempted for the first year.

The Kerala Financial Corporation (KFC) has Rs.20 crore at its disposal to fund young entrepreneurs under the Kerala State Entrepreneur Development Mission (KSEDM) for the 2013-14 financial year. However, seven months into this fiscal, Rs.18 crore of the fund still remains unallocated. The corporation claims that there has been a drop in the number of applicants this year.

The KFC branch offices in Ernakulam and Perumbavoor have so far sanctioned loans worth just Rs.1 crore each. Loans under the scheme are sanctioned free of interest and need be repaid in five years in 48 instalments with repayment exempted for the first year.

“We are now planning to give wider publicity to the KSEDM project. Project executives are being appointed in each regional office to take it to professional colleges. They will approach aspiring young entrepreneurs and provide assistance in realising their entrepreneurial dreams,” K.M. Hirandas, chief manager, KFC Ernakulam, told The Hindu.

Until now the service of project executives was available only at the zonal level. There was only one executive for the south and central zone and one for the northern zone.

KFC has been impressed by the work environment at the Start-up Village in Kalamassery, which has successfully attracted enterprising entrepreneurs. The KFC has now decided to sanction loans to every single applicant from these entrepreneurs, provided they are certified by the Start-Up Village authorities.

“Initially, there was a perception that Rs.20 lakh could be easily secured by submitting any project. Only later did applicants realise that the fund was only for genuine, committed entrepreneurs who were prepared to put in hard work. Applicants also had to clear an interview and successfully complete a training course. This may have been the reason for the drop in the number of applicants this year,” said Mr. Hirandas.

KSEDM was introduced across the State in November 2011. Under the project, Rs.20 lakh can be sanctioned to a five-member group of prospective entrepreneurs, with each member receiving Rs.4 lakh. The members should be in the18 to 40 age range and a pass in Plus Two is the minimum educational qualification. Two members can secure a loan up to Rs.8 lakh, while an individual with professional qualification or diploma can also avail himself of a loan up to Rs.10 lakh. All manufacturing and service industry-oriented entrepreneurship ventures will be funded, while agriculture, trading and vehicles are out of the net of the scheme.

The scheme attracted 600 applicants in the 2011-12 year of which 220 were shortlisted for 13-day training at the Rural Self-Employment Training Institute of the Union Bank in Perumbavoor. But only 64 turned up for the training and only 10-12 units were eventually funded.

In the inaugural year, the fund was routed through banks. But from this year onwards KFC, the nodal agency for the scheme, has been authorised to provide it directly. “The government was willing to reimburse the interest component of banks at the base rate of 10.25 per cent. But many banks wanted to charge higher interest rate and were not willing to take up the formalities of extending loans without collateral security under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

Seven batches have been trained under the scheme in the district over the last two years. Nineteen batches have started commercial production using funds allotted under the scheme. Nine units have been sanctioned loan, but are yet to start commercial production. Ten units are awaiting sanctioning of loan, 18 units are in the process of preparing project reports, and 462 entrepreneurs have been selected of which 252 have been given training during the two-year period.

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