Ziraat Times Business Desk
Srinagar: J&K Bank has launched a 45-day campaign titled YUVA Udaan to fast-track loan processing for youth under the J&K Government’s Mission YUVA. The initiative aims to streamline credit access for self-employment and entrepreneurship across the Union Territory through targeted outreach and time-bound implementation.
Documents made available to Ziraat Times suggest the bank is rolling out three specific business finance schemes which include Nano Udaan (Scheme for Creation of Nano Enterprises & Collectives), MSME Aghaaz (Scheme for Creation of New MSMEs in Focus & Sunrise Sectors) and Yuwa Parwaaz (Scheme for Business Acceleration of Existing Enterprises)
In this three part series Ziraat Times would unpack and analyse the three schemes and the available credit, interest subvention and other conditionalities of the schemes.
Nano Udaan Scheme
The Nano Udaan Scheme is meant to provide collateral-free credit up to ₹10 lakh for new nano enterprises and self-employment ventures across manufacturing, trading, service and farm-based sectors in J&K. It is supported by a government subsidy and interest subvention.
Applicable interest rates:
The scheme states: RLLR + 1.00% (Floating, monthly rests). As of July 2025, J&K Bank’s Repo Linked Lending Rate (RLLR) = 9.15%. Therefore, the effective interest rate = 9.15% + 1.00% would be about 10.15%
Would Government subsidy & interest support be available?
Yes, Interest Subvention of 5% per annum (up to ₹50,000 over 5 years) is available.
Additionally, investment subsidy of 25% of project cost for general applicants (up to ₹1 lakh) is also available. It is 30% for women/PWDs (up to ₹1 lakh)
Is margin money required from the beneficiary?
Yes, Margin Money of 10% from beneficiary is required.
What is the effective interest rate that borrowers would pay?
Effectively, while the interest rate is 10.15%, beneficiaries get a subvention of 5%, reducing the net burden to around 5.15% annually (assuming they receive the full ₹50,000 benefit over 5 years).
How feasible would this double-digit interest rate be for nano businesses?
Most nano/micro enterprises in J&K operate on slim profit margins — often 5–10% on turnover.
Let’s consider an example:
Hypothetical case:
-
Loan taken: ₹5 lakh
-
Profit margin: 10% (best-case)
-
Annual profit: ₹50,000 (10% of ₹5 lakh)
-
Annual interest payment (at 10.15%): ₹50,750
-
Effective interest after subvention (5.15%): ₹25,750
Even with subvention, the interest cost eats up over 50% of the profit, leaving little for business expansion or personal income.
If profit margin drops to 5% (₹25,000), the business may not even cover interest payments.
Challenges highlighted by finance experts:
High effective interest if government fails to disburse timely subvention.
Low profitability in nano enterprises makes repayment difficult unless operations scale up quickly.
Monthly repayment pressure may lead to early defaults for seasonally-earning ventures.
No buffer for reinvestment or crisis coping due to thin margins.
How the limitations could be overcome?
While the Nano Udaan Scheme is well-intentioned and offers valuable subsidy support, the actual interest burden (10.15%) is still too high for marginal businesses, even if brought down to 5.15% through subvention.
Given that many new businesses take 12–18 months to break even and J&K’s business environment is vulnerable to disruptions experts recommend
-
Reducing the base interest to RLLR or below (≤9%)
-
Ensuring interest subvention is disbursed directly and timely
-
Offering longer moratoriums and flexible repayment for seasonal businesses
-
Prioritizing low-interest or interest-free lending for youth, women and first-time entrepreneurs
