Stand Up India Scheme: Key Features, Eligibility, Loan | Stand Up India Scheme UPSC

By BYJU'S Exam Prep

Updated on: December 6th, 2023

Stand Up India Scheme was launched in 2016 to promote entrepreneurship at the grass-root level of economic empowerment and job creation. This scheme provides SC/ST and/or women entrepreneurs above 18 years of age with loans between Rs.10 lakh and Rs.1 crore. The loans under the scheme are available for only Greenfield projects. Over 1.25 lakhs of branches from various banks are expected to provide loans to tribal or Dalit and women entrepreneurs in their service range.

Stand Up India Scheme is a government initiative aimed at promoting entrepreneurship and facilitating bank loans to marginalized communities, particularly Scheduled Castes (SCs), Scheduled Tribes (STs), and women. Its understanding is crucial for the UPSC Exam as it reflects the government’s focus on inclusive growth and economic empowerment. The article discusses the Scheme in detail, covering its related ministry, launch date, facts, and important figures.

Stand Up India Scheme

Stand Up India Scheme is a program initiated by the Government of India to encourage entrepreneurship in India, mainly in Scheduled Castes (SC), Scheduled Tribes (ST), and women above 18 years of age. The scheme is handled by Finance Ministry of India and is anchored by the Department of Financial Services (DFS). The Stand Up India Scheme was launched on 5 April 2016. The scheme was started to effortlessly provide loans to SC or ST community entrepreneurs or women. Under this scheme:

  • Each bank branch (irrespective of Bank) is instructed to give personal loans ranging between Rs.10 lakh and Rs.1 crore to a minimum of one SC or ST prospective borrower and a woman borrower for starting their enterprise as an emerging entrepreneur.
  • The loan can be sanctioned to borrowers with enterprises such as manufacturing, services, and the trading sector.
  • It is important to note that the enterprise setup needs to be a greenfield enterprise. A greenfield project is not constrained by prior work.
  • It is constructed on unused land without needing to remodel or demolish an existing structure.
  • Stand Up India Scheme completed six years in April 2022, and the Finance Ministry has extended it till 2025. The New Margin money requirement was around 25% earlier and is now reduced to approx. 15%.

Stand Up India Scheme: Requirement for Loan

Stand Up India Scheme has played a crucial role in promoting entrepreneurship and new businesses across the nation. With over 2.5 lakh people initiating their entrepreneurial journey annually, the scheme has fostered the establishment of new industries and businesses in previously underserved areas. Following are the requirements for availing loans under the Stand Up India Scheme:

  • Age criterion: SC/ST and/or women entrepreneurs must be above 18 years of age.
  • No defaulters: Borrowers should not have a history of defaulting on loans from any bank or financial institution.
  • Greenfield enterprises: Loans are exclusively provided to Greenfield enterprises, excluding others.
  • Ownership criteria: In non-individual enterprises, a minimum of 51% shareholding and controlling stake must be held by an SC/ST or woman entrepreneur.

Beneficiaries of Stand Up India Scheme

Stand Up India Scheme focuses on supporting women and SC/ST entrepreneurs by providing them with loans. However, to be eligible for the scheme, these entrepreneurs must meet specific criteria outlined by the government. Beneficiaries of the Stand Up India Scheme is provided below:

  • Age requirement: The individual seeking a loan must be at least 18 years old.
  • Enterprise types: The firm or enterprise seeking a loan can be an LLP, Private Limited, or a partnership firm.
  • Ownership control: In the case of a partnership firm, at least 51% of shares and stacks must be controlled by a scheduled caste, scheduled tribe person, or a woman.
  • Greenfield projects: The loan is only certified for the first-ever project or venture, specifically in the trading, manufacturing, or service sectors.
  • Debt-free record: The loan applicant should not have any outstanding debts or payment defaults to any bank or organization.
  • Product focus: Enterprises applying for loans should be working on state-of-the-art consumer goods or commercial merchandise.
  • DIPP approval: The enterprises must be approved by the Department of Industrial Policy & Promotion (DIPP).

Stand Up India Scheme – Facts to Remember

Stand Up India Scheme, launched by the Government of India in April 2016, is an initiative of the Finance Ministry and DFS. Here are some important facts to remember about the scheme:

  • Loan amount and nature: The scheme offers a composite loan account covering 75% of the total venture’s cost.
  • Interest ratePersonal loan interest rate depends on the bank’s minimum applicable rates but does not exceed MCLR + 3% + tenor premium.
  • Loan repayment duration: Borrowers have a repayment duration of 7 years, including a freeze period of up to 18 months.
  • Inclusion of agriculture activities: The scheme now includes activities associated with agriculture, expanding its scope of support.
  • Margin money requirement: The margin money requirement, previously around 25%, has been reduced to approximately 15%, making it more accessible for borrowers.

Stand Up India Scheme: Benefits to Citizens

The Indian government’s key objective for launching the Government schemes was to benefit the ordinary people and citizens of India. As a result, and as per the aim, this scheme profited many people across the country.

  • As per the central aim of this scheme, it has encouraged and motivated emerging entrepreneurs. Consequently, it also minimized unemployment with the increase in emerging businesses.
  • Stand Up India scheme also provides an appropriate platform for investors to get expert advice and information about various laws.
  • Along with loans, the entrepreneurs also get assistance and guidance under this scheme for two years from the beginning of the start-up. It also includes post-establishment help to the consultants.
  • Stand Up India scheme additionally benefits from repaying the loan, so entrepreneurs need not worry about it.
  • The scheme allows loan repayment in seven years, reducing the pressure of loan repayment for entrepreneurs. However, the borrowers must pay back a specific amount yearly per their choice.
  • This scheme can be significantly effective in creating new jobs and empowering the social and economic lives of women and SC/ST people.
  • It can also be seen as a driving influence for encouraging other central government schemes such as Skill India and Make in India.
  • Besides, it has enabled the financial and social presence of SC/ST people and women by providing access to banks and technological education.
  • Stand Up India Scheme also offers some tax benefits to the applicants, such as relaxation on Capital Gain Tax, recovery of tax on the incomes, no pressure of paying hefty taxes during initial start-up time, and many more.

Significant Characteristics of Stand Up India Scheme

The Prime Minister of India launched the scheme to promote entrepreneurship and motivate women and ST/SC people to become entrepreneurs. The scheme has the following features, which make it popular and beneficial for the citizens of India.

  • The scheme mandated that every bank branch, irrespective of the bank name, must facilitate loans to two entrepreneurial ventures yearly. It includes one woman entrepreneur and one SC/ST entrepreneur.
  • The borrowers are provided with RuPay debit cards for easy withdrawal of the loan amount whenever required.
  • Refinance gaps through the SIDBI with a primary amount of Rs.10,000 crores.
  • The scheme created a corpus of 5000 crore INR for credit assurance through NCGTC.
  • It also supports the borrowers by offering wide-ranging assistance, including pre-loan training, such as smoothing the loan process, factoring, marketing, and much more.
  • An online portal is being developed to help people with online registration and other support facilities.
  • Stand Up India Scheme is directed by the SIDBI in cooperation with the DICCI. Certain Institutions are also involved in the scheme other than DICCI.
  • The SIDBI and NABARD hold the title of SUCC for this scheme.
  • Borrowers who apply for loans through this scheme are also acquainted with useful online platforms in business and other means of online marketing, web entrepreneurship, and many others.

Stand Up India: Inter-Sectoral Associations and Conjunctions

Stand Up India Scheme is associated with other governmental schemes. These instances prove it. The BMC has delivered around 5100 Electronic Rickshaws underneath the Pradhan Mantri Mudra Yojana during the commencement of this scheme. With this, BMC aimed to make people aware of schemes like social security & financial inclusion.

Additionally, BMC’s idea was to smooth the advancement of pedal rickshaw owners to E-rickshaw owners. It will help them to generate three times more income than the previous rickshaws. Furthermore, this shift will help uphold cleanliness and support Swachh Bharat Abhiyan. That’s how the BMC E-Rickshaws program naturally incorporated into the Stand Up India scheme.

The borrowers under the Stand Up India scheme are also roofed under many other crucial schemes by the Prime Minister, such as Pradhan Matri Jan Dhan Yojna and Pradhan-Mantri Suraksha Yojana.

Challenges of the Stand Up India Scheme

Any scheme or program set up for the citizens’ benefit has pros and cons, advantages and disadvantages. Also, they face many challenges when they are released to the public. Stand Up India Scheme also has some challenges.

  • Stand Up India scheme can be ineffectual or unproductive if people are not being educated about the socio-economic scopes supporting and enhancing women and ST/SC entrepreneurship.
  • The DIPP evaluates whether an enterprise’s product is innovative or not as per the scheme’s criteria. This evaluation process can delay the venture, and might be some potential and promising entrepreneurship can be lost.
  • Another criterion of the scheme (the enterprise’s turnover must be 25 crores) made it more for prospective entrepreneurs to get the financial benefits as only a few SC/ST, and women entrepreneurs can fulfill this criterion.
  • As per its criteria, the scheme is only viable for the trading, manufacturing, and service sector but its loan range (10 Lakhs to 1 crore) is insufficient to start a manufacturing venture.
  • Until now, some women and SC/STs across the country have not been inspired or encouraged about technologies, skilled labor, and many other entrepreneurial skills.
  • Moreover, no institutional measures are mentioned in the scheme to tackle and overcome these challenges.

Stand Up India Scheme UPSC

Stand Up India Scheme: Government initiative promoting entrepreneurship and facilitating bank loans for women, SC, ST entrepreneurs in India. This topic is essential part of UPSC Syllabus and question are asked in both UPSC Prelims and mains exam.

Candidates must also check the Current Affairs to get updated with the latest developments in Stand Up India Scheme. With its focus on inclusive growth and economic empowerment, the Stand Up India Scheme is a catalyst for entrepreneurial success and socio-economic development.

Stand Up India Scheme UPSC Questions

Candidates should prioritize the preparation of the Stand Up India Scheme as it holds significant importance in the UPSC Exam. After thoroughly understanding the topic, candidates should revise the following sample questions to enhance their knowledge.

Question: Which of the below-mentioned sectors are covered in the criteria of the Stand Up India Scheme? (A) Manufacturing, (B) Services, (C) Trading, (D) All three

Answer: (A) Manufacturing

Question: Under the Stand Up India Scheme, loans are provided for setting up which type of businesses? (A) Small-scale industries, (B) Agro-based enterprises, (C) Retail trade ventures, (D) All of the above

Answer: (D) All of the above

For UPSC Mains

Question: Discuss the key objectives and features of the Stand Up India Scheme. How does this scheme promote entrepreneurship and financial inclusion among marginalized sections of society?

Question: Analyze the impact of the Stand Up India Scheme on the empowerment of women and the promotion of economic growth. What are the challenges faced in the effective implementation of this scheme, and what measures can be taken to overcome them?

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