AI SummaryInterest Subvention Scheme supports micro and small manufacturing enterprises in Karnataka by offering institutional credit for capital investments at lower interest rates. Government of Karnataka runs this scheme through Karnataka State Financial Corporation (KSFC), and it now covers all sectors except real estate and construction.
The scheme reimburses ₹5.5% per annum interest on eligible loans to bring down the borrowing cost for new and existing profit-making units. This helps entrepreneurs expand production capacity and modernise their operations.
Interest Subvention Scheme - Introduction
Interest Subvention Scheme is a financial tool introduced by government of Karnataka to encourage growth among new and existing profit-making micro and small enterprises. It provides institutional credit for capital investments at reasonable interest rates and is implemented through Karnataka State Financial Corporation (KSFC).
As per the latest update, the scheme has been modified. Earlier it covered only manufacturing activities, but now all sectors can avail it except real estate and construction. This widens the reach of the scheme to more business owners across the state.
Key Information
| Scheme Name | Interest Subvention Scheme |
| Level | State |
| Scheme For | Individual |
| Beneficiary State | Karnataka |
| Category | Business & Entrepreneurship |
| Nodal Department | Finance Department |
| Implementing Agency | Karnataka State Financial Corporation |
Benefits
Eligible applicants get significant interest relief on capital investment loans. The effective interest rate is reduced by an interest subvention of ₹5.5% p.a., which government of Karnataka reimburses.
| Loan Type | Loan Amount Limits |
| Minimum Loan Size | ₹5.00 lakhs |
| Micro & Small Enterprises | Up to ₹500.00 lakhs |
| Allied Services Enterprises | Up to ₹200.00 lakhs |
The benefit remains valid for 5 years from the date of the first loan disbursement, even if the total repayment period exceeds five years. To keep getting the benefit, stay regular in repayment installments.
Eligibility
Proprietary concerns, partnership firms, companies, and other legal entities can apply. The scheme covers new investments in building, plant and machinery for production, and expansion, diversification, modernisation or technology up-gradation projects.
Applicants should not have availed similar interest subsidies under other government schemes. For example, if Ramesh starts a new bakery, he becomes eligible for the subsidy on machinery, provided he has not claimed similar benefits elsewhere.
Exclusions
The modified scheme covers all sectors except real estate and construction. Activities not covered include: enterprises already receiving interest subsidies from other schemes, refinancing or takeover of loans from other banks or private financiers, infrastructure projects, hotels, restaurants, hospitals, commercial real estate, malls, cinema houses, transport vehicles, and general trading or non-manufacturing business activities.
Application Process
Application is done offline through KSFC branch offices.
STEP 1 - Visit the nearest Branch Office of Karnataka State Financial Corporation during working hours.
STEP 2 - Collect the prescribed application form from the staff.
STEP 3 - Fill in all mandatory details and attach the required documents, ensuring self-attestation where necessary.
STEP 4 - Submit the completed application and request a formal acknowledgment or receipt that includes the submission date and a unique identification number.
Documents
Keep these documents ready before applying.
- Passport-size photograph
- Registration certificate
- PAN card
- Audited financial statements for existing units
- Bank account details for loan disbursement
- Other specific documents requested by KSFC
References
FAQ's
Who is eligible to apply?
All categories of legal entities, including proprietary concerns, partnerships, and companies making new investments in production equipment, are eligible.
For how long is the interest subvention provided?
The ₹5.5% interest subvention is provided for a maximum period of 5 years from the date of the first disbursement.
Can I use the loan to purchase land?
No, the purchase of land from agencies like KIADB or KSSIDC is not covered under this scheme.
What if I default on my loan repayment?
You must maintain regular repayment of all your loans to continue receiving the interest subvention benefit.
Are women entrepreneurs eligible?
Yes, provided they have not already availed of interest subsidy benefits from other state or central government schemes.