Refinance for Small Road Transport Operators Scheme of SIDBI provides assistance in transportation operations, new as well as existing operators. Further, to create new employment opportunities in the same. Accordingly, the refinancing will cover the costs of chassis, body, initial taxes, insurance, capital for the new vehicles.
Objectives of the Refinance for Small Road Transport Operators Scheme
- Aiding for the attainment of new and existing vehicles
- Providing the expenses of operation to units related to the transport business
- Financially assisting the Small road transport operators
- Encourage to purchase (new or old) vehicles from standard manufacturing companies
Eligibility for Refinance for Small Road Transport Operators Scheme
- An individual or an establishment trying to own transport vehicles for business
- Further, the applicant must have a driving license
- Subsequently, borrowers should have a permit from an authority to use it for business
- The applicant should be experienced and professional
- Also, the transport business owing to one or more buses or truck are eligible.
Note that, any individuals, proprietary concerns, partnership firms, units involved in transportation fulfilling the said criteria can apply.
Nature of Assistance Under Refinance for Small Road Transport Operators Scheme
- The primary assistance if offered through refinancing.
- In case of a new vehicle, 90% of the total cost of the vehicle is covered.
- However, in the case of old vehicles, 25% is the margin that will be set aside and thus, the scheme covers 75% of the cost through a loan.
- The rate of assistance will vary with respect to the loan amount and the bank.
Security
The vehicle purchased under the scheme will be held as the security from the loan. Further, until the loan is cleared, the vehicle shall be in the name of the borrower and the bank (as hypothecator and hypothecate).
Collateral Security for Refinance
- Loans till Rs 10 lakhs: This is covered under CGTMSE and thus does not require collateral security.
- Loans over Rs 10 lakhs: The security is equivalent to the borrowed money in the form of:
- Mortgage
- Bankable security
- Shares
- Bonds of value
- Third-party guarantee
Structure of Repayment
- New vehicles: The borrower must repay the advance before 60 months in monthly installments. Nonetheless, the period of 60 months beings from the day of registration.
- Old vehicles: The borrower must repay the loan within 30 to 48 months. However, the period begins one month after acquiring the loan.
Fee Structure Under Refinance for Small Road Transport Operators Scheme
For term loans: the upfront fee starts after Rs 25000. Accordingly, for Rs 25,000 to Rs 2 lakhs, the fee is Rs 270. Nevertheless, for loans over Rs 2 lakh, the fee is 1.25% of the advance amount
Documentation fee: For over Rs 2 lakhs the fee will vary between Rs 200 per lakh to Rs 25000 for the maximum amount.
Insurance
Obtaining insurance is mandatory in the joint name of the hypothecate and the hypothecator. Further, deposit this in the lending office.
Application
The applicant may apply loan from the suitable bank offering the scheme. For instance, a bank’s application is here and the list of documents here.