DAY NRLM has the provision for interest subvention to cover the difference between the lending rate ...........

Economic and social issues(Phase-I/II) Budgeting and Fiscal policy

DAY-NRLM has the provision for interest subvention to cover the difference between the lending rate of bank and 7% on all credit from bank/financial institutions availed by women SHGs, for a maximum of Rs. 300,00/- SHGs. The difference between the bank lending rate and 7% for loans up to Rs. 300,00/- subject to maximum limit of

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Nabard grade-A,Previous year Memory Based Paper 18 Sept,2021

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5.5%

7.5%

10%

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Explanation:

Let’s break it down:

- Under DAY-NRLM, women SHGs get interest subvention—the government covers the difference between the bank’s loan rate and 7% for loans up to Rs. 3,00,000.

- But this support is capped. The biggest difference the government will cover is up to a certain percentage over 7%, no matter what crazy rate the bank may charge.

- Here’s what your options mean:

- Option 1: 5%. If the bank charges more than 12%, the SHG still gets only 5% covered.

- Option 2: 5.5%. Same logic—max difference the programme covers is 5.5%.

- Option 3: 7%. That would mean total coverage for any loan rate up to 14%.

- Option 4: 7.5%. Goes even higher, which isn’t the actual rule.

- Option 5: 10%. That’s just way too high—not as per the scheme.

- The actual scheme says the subvention is for the difference in rates up to a maximum of 5.5%.

So the correct answer is:

Option 2: 5.5%