West Bengal is planning to distribute a new credit card designed to provide credit to the Indian state’s small and midsize enterprises.
The card, to be issued by rural and urban cooperative banks, will be similar to the Kisan credit card, which the National Bank for Agricultural and Rural Development designed to provide farmers with credit, a spokesperson for the State Department of Micro, Small and Medium Enterprises tells PaymentsSource.
“Subject to clearance from authorities, we will issue the card by the end of this year, which would provide standing credit to the enterprises,” he says, noting no similar product exists for the sector.
However, some banks provide credit cards to such enterprises, but only after their operations have existed for at least three years to show their viability, the spokesperson notes.
“What we are trying to address is the credit that enterprises might need just after inception or at the early growth stage,” he adds. “Under our scheme, the enterprise will always be entitled to some amount of predefined credit.”
The spokesperson was unable to provide more operational details about the card scheme.
Under the Kisan credit card scheme, rural and cooperative banks provide cards based on farmers’ land holdings to help them buy agricultural supplies. Cardholders also may secure cash advances for farming-related purchases.
The scheme asks farmers to repay their card loans within three years, though they may make any number of cash advances and purchases within a fixed limit based on the scale of their farm operations. Cash advances must be repaid within 12 months. The cards impose annual interest rates of less than 5%.
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