Retired government employees can get financial assistance for their start-ups in greenfield enterprise.
by Sajjad Bazaz
Three decades of turmoil and frequent shutdowns have taught Kashmiri businessman survival lessons. Not only did the local businesses survive the turmoil, but they also flourished in many cases. We have scores of small entrepreneurial success stories which have emerged here in these chaotic decades amid regular curfews and shutdowns.
In other words, most of the business ventures, particularly small businesses, have adopted the conflict as way of life. Keeping general rules aside, these small businesses have time and again been working as partners and nurturing social entrepreneurship.
So, ours is a place having the biggest economic strength in extensively spread small enterprises. The small enterprise sector includes small manufacturing units, service sector units, shopkeepers, fruits and vegetable vendors, food-service units, repair shops, small industries, artisans, food processors, horticulture units and others in rural as well as urban areas.
As we know, appropriate financial support is pivotal to be a part of this small enterprise sector, there are various government and individual schemes available in the product basket of the banks. A good number of readers have been mailing their queries about the ways and means of seeking financial assistance through a financial scheme. It includes retired government employees who express their urge to be an entrepreneur, but have a lack of financial support to venture into entrepreneurship. They have this impression that the banks won’t finance their ventures with age not being on their side.
“Even we don’t find any government sponsored scheme which can render financial assistance to a retired person’s business venture,” writes a retired government employee in his communication. “Why are banks wary of financing retired personnel for their business ventures?” he enquires.
A World Health Organization (WHO) report merits a mention here. It states that life spans are increasing. In other words, the estimates confirm the trend for longevity. “Globally, life expectancy has increased by more than 6 years between 2000 and 2019 – from 66.8 years in 2000 to 73.4 years in 2019. While healthy life expectancy (HALE) has also increased by 8% from 58.3 in 2000 to 63.7, in 2019,” the report says.
We find many retired government employees having the appetite to work and be productive as entrepreneurs. But the financial constraints deny most of them to explore their potential. When they look at the banking and financial institutions to seek funding for their entrepreneurial projects, they get disappointed. The retired employees are hardly trusted by banks and financial institutions for business activities, as they feel age is not on their side.
However, banks, of course, have loan schemes in place for them, but only under the personal loan segment. Here the quantum of finance is too low to meet their project requirement and higher rate of interest is also a concern.
But the fact is that in modern times, retired government employees still have time on their side. Imagine a person retiring at 60, living till at least 75 (if not more), perhaps physically weakened, but still mentally sound. What do they do with such a long retirement? And, besides, the fact that the increase in life expectancy leaves retirees with too much time on their hands and their skills un-utilized.
So, helping the retired employee to capitalize on potential to engage themselves in productive activities makes sense. Precisely, self-employment ventures through entrepreneurship should not be a forbidden area for the retired government employees, if they have skill and appetite for it.
J&K Bank, a premier regional financial institution with national presence and global standards, has taken a lead in the banking fraternity by introducing a finance scheme, ‘Start Again’, to finance start-ups of retired employees below the age of 65 years in Greenfield enterprise in manufacturing and services sector. Notably, hand holding of the retired employees seeking financial assistance for his/her entrepreneurship venture is part of the scheme. The bank shall provide guidance to them to set up business enterprises.
Some of the indicative ventures in the scheme include media & entertainment, tourism, healthcare, IT & allied services, food product sector, arts and crafts etc. Besides, ventures like fitness centres, kindergarten / pre-school, formal schools, crèches, tuition centres also fall under the ambit of the scheme.
Notably, projects allied to agriculture such as pisciculture (fishery), apiculture (beekeeping), poultry, livestock, dairy, agri-clinics & agribusiness centers, aggregation agro industries, food & agro processing, etc. are also eligible for funding.
The amount of loan granted under the scheme is linked to the nature of activity. It ranges between Rs.2.00 Lakh to Rs. 20.00 Lakh. However, the scheme has a provision of extending enhancement facilities or an additional working capital facility to such units which generate employment. The enhanced / additional facility ranges from Rs 1.00 Lakh to Rs. 2.00 Lakh which will be basically funding the salary component of the employees working in the unit.
The main aspect of any loan is the comfort of the bank. When we talk of comfort of the bank, it’s the kind of security which the borrower has to give under the scheme.
So, what security is required under the scheme for the borrowers (retired employees) seeking financial assistance for business ventures? As per the scheme parameters, the loans are primarily secured by way of hypothecation/assignment/mortgage (registered or equitable mortgage) of all the assets (fixed and current) financed by the bank. In collateral terms, loans up to Rs.10.00 lakh are covered under credit guarantee scheme for which the fee shall be borne by the bank. Loans above Rs.10.00 Lakh, are secured either through credit guarantee scheme for which fee shall be borne by the borrower, to be paid upfront to the trust; third party guarantee of two persons or through mortgage of property, registered or equitable.
Notably, the repayment schedule of the loan includes a repayment holiday of two years. Overall the loan is to be repaid within 7 years including a repayment holiday of two years.
However, before concluding, there is a word of caution for the retired employees aspiring to venture into entrepreneurship. There’s an adage: look before you leap. Cross check the circumstances around you before taking a loan for setting up a unit. Avail loan only when there is absolute need for it. A big loan outstanding will be detrimental not only to your finances but to your family too. Once you go for the loan, it would be better to cover your liability through an insurance loan protection policy. This insurance policy absolves your family from the burden of loan liabilities in your absence.
Sajjad Bazaz heads Internal Communication & Knowledge management Department of Jammu & Kashmir Bank Ltd. The views expressed are his own and, not the institution he works for.
