Policy Update
Harshita Maheshwari
About
National Backward Classes Finance & Development Corporation (NBCFDC) is a Government of India undertaking under the Ministry of Social Justice and Empowerment. The Corporation was founded on January 13th, 1992, under Section 25 of the Companies Act, 1956. NBCFDC provides financial assistance through State Channelizing Agencies (SCAs) nominated by state governments and union territories and public sector and regional rural banks.
The Corporation was created with a vision to take a leading role in improving the economic status of the target group of the backward classes. It was established to promote economic and developmental activities for the benefit of Backward Classes and to assist the poorer section of these classes in skill development and self-employment ventures. The mission of NBCFDC is to provide concessional financial assistance to eligible members of the Backward Classes for self-employment ventures and skill development training.
Objectives
The main objectives of NBCFDC are –
- To promote economic and development activities for the benefit of the Backward Classes.
- To assist, subject to such income and economic criteria as may be prescribed by the government from time to time, individuals or groups of individuals belonging to Backward Classes by way of loans and advances for economically and financially viable schemes and projects.
- To extend loans to the Backward Classes for pursuing general, professional, vocational, and technical education or training at the graduate and higher levels.
- To provide for gainful employment and skill development to the target group and to assist in the upgradation of technical and entrepreneurial skills of Backward Classes for proper and efficient management of production units.
Key Initiatives
1. Term Loan Scheme
- General Loan Scheme – Under this scheme, loan assistance is available for various income-generating activities in sectors such as (a) Agriculture and Allied Sector, (b) Small Business/Artisan & (c) Traditional Sector and Transport & Service Sector. Loans are given up to 85% of the project cost, subject to a maximum of ₹15 Lakh per beneficiary. Loans up to ₹5 Lakh are provided at an interest rate of 6% p.a. Loans above ₹5 Lakh and up to ₹10 Lakh are provided at an interest rate of 7% p.a. Loans above ₹10 Lakh and up to ₹15 Lakh are provided at an interest rate of 8% p.a. The loan repayment period is 8 years.
Over the past five years, NBCFDC’s General Loan Scheme has seen disbursements nearly double, from ₹124.8 crore in 2020–21 to ₹249.49 crore in 2023–24. This signals a strong post-pandemic recovery. However, beneficiary numbers remained relatively stable, indicating a shift toward larger loans per individual, likely for more sustainable or capital-intensive ventures. While this reflects deeper financial support, it also raises concerns about maintaining broad outreach alongside increased funding.
Data sourced from NBDFDC Annual Reports (2019-20, 2020–21, 2021–22, 2022–23, 2023-24).
- New Swarnima Scheme – Under this scheme, loan assistance is available for women of Backward Classes to inculcate the spirit of self-reliance among them. Loans are given up to 95% of the project cost. The maximum loan limit per beneficiary is ₹2 Lakh at an interest rate of 5% p.a. The loan repayment period is 8 years.
Over the past five years, the New Swarnima Scheme saw initial growth followed by a sharp decline. Beneficiaries rose to 7,764 in 2021–22 but dropped to just 1,511 in 2023–24, while disbursements fell from ₹31.89 crore to ₹10.34 crore, a 68% decrease. This downward trend signals a significant drop in the scheme’s reach and effectiveness, highlighting the need for renewed promotion, stronger implementation, and targeted support to restore its impact for women from backward classes.
Data sourced from NBCFDC Annual Reports (2019-20, 2020–21, 2021–22, 2022–23, 2023-24).
- Education Loan Scheme – Under this scheme, loan assistance is available to students of the Backward Classes. The applicant should have obtained admission for any professional, technical, vocational courses approved by the appropriate agency, such as AICTE, Medical Council of India, and UGC, etc., in a duly accredited or recognized institute and have a minimum of 50% marks in the qualifying exam. Loans are given up to 90% of the course fees for studies in India and up to 85% of the course fees for studies outside India. The maximum loan limit per student is ₹15 Lakh for studying in India at an interest rate of 4% p.a. (3.5% p.a. for a girl student). The maximum loan limit per student is ₹20 Lakh for studying abroad at an interest rate of 4% p.a. (3.5% p.a. for a girl student). The loan is to be repaid in 15 years with a moratorium period of 5 years.
The Education Loan Scheme under NBCFDC has experienced a sharp decline since its peak in 2020–21, when ₹9.68 crore was disbursed to 1,145 beneficiaries. By 2023–24, support dropped to ₹4.19 crore and just 96 beneficiaries, marking a 90% decrease in outreach. This trend highlights reduced accessibility or demand and underscores the need for revived promotion, simplified processes, and stronger ties with educational institutions to restore the scheme’s relevance.
Data sourced from NBCFDC Annual Reports (2019-20, 2020–21, 2021–22, 2022–23, 2023-24).
2. Micro Finance Scheme
- Micro Finance Scheme – Under this scheme, loan assistance is available to Self Help Groups (SHGs) to provide credit facilities for the target group, especially for mixed group beneficiaries. Loans are given up to 90% of the project cost. The maximum loan limit per Group is ₹15 Lakh and the loan per beneficiary in SHG is ₹1.25 Lakh at an interest rate of 5% p.a. The repayment period is 4 years.
The Micro Finance Scheme under NBCFDC has witnessed a drastic decline, with disbursement dropping from ₹121.12 crore for 61,119 beneficiaries in 2019–20 to just ₹1.26 crore for 247 beneficiaries in 2023–24—a 99% fall in both funding and outreach. Despite some fluctuations in the interim years, the overall trend reflects a serious erosion of the scheme’s scale and impact. Given its importance in promoting self-employment among marginalized communities, this decline calls for urgent action to identify operational gaps, restore credit linkages, and rebuild trust at the grassroots level.
Data sourced from NBCFDC Annual Reports (2019-20, 2020–21, 2021–22, 2022–23, 2023-24).
- Mahila Samriddhi Yojana – Under this scheme, loan assistance is available to Self Help Groups (SHGs) to provide credit facilities for the target group of women beneficiaries. Loans are given up to 95% of the project cost. The maximum loan limit per Group is ₹15 Lakh and the loan per beneficiary in SHG is ₹1.25 Lakh at an interest rate of 4% p.a. The repayment period is 4 years.
The Mahila Samriddhi Yojana (MSY) has supported women from backward classes through micro-credit, but both disbursement and outreach have declined in recent years. While disbursement peaked at ₹139.92 crore in 2022–23, beneficiary numbers fell sharply from 70,860 in 2019–20 to 19,201 in 2023–24—a 72% drop. This suggests a shift toward larger loans per beneficiary, but also signals reduced reach. The recent decline highlights the need to revive outreach, strengthen local partnerships, and ensure the scheme continues to empower women effectively.
Data sourced from NBCFDC Annual Reports (2019-20, 2020–21, 2021–22, 2022–23, 2023-24).
- Small Loan – Under this scheme, loan assistance is available to individuals to provide credit facilities for the target group. Loans are given up to 85% of the project cost. The maximum loan limit per beneficiary is ₹1.25 Lakh at an interest rate of 6% p.a. The repayment period is 4 years.
The Small Loan Scheme has shown steady growth, with disbursement rising from ₹102.98 crore in 2019–20 to ₹168.16 crore in 2023–24. Beneficiaries also increased from 19,628 to over 32,000 during the same period, peaking at 37,159 in 2022–23. Despite a slight dip in the latest year, the scheme continues to effectively support small-scale entrepreneurship among backward class communities.
Data sourced from NBCFDC Annual Reports (2019-20, 2020–21, 2021–22, 2022–23, 2023-24).
- NBCFDC-MFI Loan – Under this scheme, loan assistance can be channelized to SHGs through Micro Finance Institutions (MFIs) providing Bank Guarantee or similar financial instruments as security. Loans are given up to 90% of the project cost. The maximum loan limit per Group is ₹15 Lakh and the loan per beneficiary in SHG is ₹1.25 Lakh at an interest rate of 12% p.a. Under this scheme repayment period is 4 years.
Source: Annual Report 2023-24, The rates of interest under various loan schemes implemented by the Corporation
3. Training and Skill Development Programmes
NBCFDC facilitates skill development training programmes in broad conformance to the Common Norms for upgradation of Technical and Entrepreneurial Skills, so that eligible members of the target group may engage in developmental activities by way of self-employment or wage employment. The Ministry of Social Justice and Empowerment launched Pradhan Mantri Dakshta Aur Kushalta Sampann Hitgrahi (PM-DAKSH) Yojna during 2020-21. The target group of NBCFDC for the skill training programme under PMDAKSH is as under:
- Other Backward Classes (OBCs) having an annual family income below ₹ 3 lakh.
- Economically Backward Classes (EBCs) having an annual family income below ₹ 1 lakh.
- De-notified Nomadic and Semi-Nomadic Tribes (DNTs) without any income criteria.
4. National Fellowship for OBC Students
NBCFDC has been designated as the Nodal Agency for executing the National Fellowship for OBC students (NFOBC) Scheme starting from October 2022. This Central Sector Scheme of the Government of India aims to empower 1000 OBC students annually by providing fellowships (financial support) for advanced studies and research, leading to M.Phil./Ph. D. degrees. Candidates must qualify for the NET-JRF (for Humanities/Social Science) or UGC-CSIR-NET (for Science) exams.
During the year 2023-24, the Corporation has disbursed ₹89.42 Crore to 2009 scholars under the NFOBC Scheme.
5. Technology Upgradation of Clusters
The Corporation has introduced the Technology Upgradation Scheme to facilitate technological upgradation and capacity augmentation to clusters of target groups, identified by NBCFDC. It aims to improve the quality and productivity of the products being produced and services being rendered by them. Additionally, the objective of the scheme is to enable the target group to face the competition in domestic and international markets.
During 2023-24, NBCFDC has released an amount of ₹22.48 Lakh to Indian Institute of Carpet Technology (IICT), Tripura OBC Cooperative Development Corporation (TOBCCDC) and North Eastern Regional Agriculture Marketing Corporation Ltd. (NERAMAC). Cumulatively, the Corporation has sanctioned ₹4.29 Crore and released ₹3.46 Crore till 31.03.2024 under this scheme.
6. Marketing Linkages
The majority of the Backward Classes are artisans and handicraft persons. Therefore, the Corporation is constantly helping them in numerous ways to expand the new technology and quality in this class of products, according to the changing market demand. The expectation is that the products can meet the test of competition and the beneficiaries can earn a profit. Some of the beneficiaries whose products are useful in day to day life, innovative and of excellent quality, Corporation provides them opportunities in various national and international level platforms like – IITF, New Delhi, Surajkund Handicraft Mela, Faridabad, Haryana, Delhi Haat, New Delhi and State organized fairs and exhibitions, where stalls are provided free of cost.
These events not only provide much-needed marketing exposure for these artisans but also offer an opportunity to sell their products at good prices and understand the current market conditions regarding the quality and finishing of goods and products, packaging, and more, which they would otherwise find difficult in their local markets.
7. Awareness Programmes
NBCFDC is engaged in lending & other developmental activities to achieve its objectives of economic empowerment of OBCs through the Channel Partners in various states. In addition to this, the target group can also be empowered through spreading awareness amongst them by our various programmes for self-employment, skill development, and marketing support. The following activities may be conducted during these Camps:
- Spreading of information and Procedure about the NBCFDC loan scheme, Skill Development Programme, and marketing support.
- Distribution for loan application/Registration of beneficiaries.
- Counseling for timely repayment of the loan for recovery from the Beneficiaries.
- Identification of beneficiaries & Artisans having potential for training & participation in exhibition(s).
- Any other area-specific tasks to achieve the objectives of the NBCFDC.
Achievements So Far
Over the last five years, NBCFDC’s disbursement patterns reveal a significant shift in focus and strategy. While the highest disbursement occurred in 2019–20 at ₹604.17 crore, there was a noticeable dip in 2020–21, likely due to the pandemic. Since then, disbursements have steadily recovered, reaching ₹525.09 crore in 2023–24—indicating a return to pre-pandemic funding levels. However, the number of beneficiaries assisted does not follow the same recovery pattern. From a high of over 1.7 lakh beneficiaries in 2019–20, the number declined sharply to just 68,372 in 2023–24, reflecting a ~60% drop from the pre-pandemic peak.
This divergence suggests a strategic pivot toward deeper financial support per individual or project, as the average amount disbursed per beneficiary has more than doubled during this period—from around ₹35,000 in 2019–20 to nearly ₹77,000 in 2023–24. While this may indicate a focus on strengthening enterprise viability or promoting larger-scale ventures, it also raises questions about equity and outreach. The sharp decline in coverage could limit the organization’s impact on broader social empowerment unless balanced with inclusive access strategies.
Data sourced from NBCFDC Annual Reports (2019-20, 2020–21, 2021–22, 2022–23, 2023-24).
Way Forward
To strengthen its impact and align with its mission of social empowerment, NBCFDC should consider adopting a dual approach that balances depth of support with breadth of outreach. While the increasing average disbursement per beneficiary indicates a positive move toward sustainable enterprise development, the significant decline in the number of individuals assisted highlights the need to reassess targeting strategies. Expanding partnerships with grassroots organizations, self-help groups, and community-based institutions can enhance last-mile connectivity and ensure that financial assistance reaches a wider and more diverse set of beneficiaries, especially in underserved regions.
Moreover, NBCFDC can invest in digital platforms and data-driven monitoring to track beneficiary outcomes, streamline disbursement processes, and improve transparency. Scaling up skill development programs in tandem with credit schemes can also ensure that beneficiaries are equipped not only with financial resources but also the technical and managerial skills needed for long-term success. A targeted communication strategy and periodic impact evaluations will further enable the organization to adapt its programs to emerging socioeconomic needs while reinforcing its commitment to inclusive development.
References
- NBCFDC. (2024, December). NBCFDC 32nd Annual Report (2023-24). nbcfdc.gov.in/nbcfdc/web/sites/default/files/2024-12/Annual%20Report%202023–24.pdf
- NBCFDC. (2024, August). NBCFDC 31st Annual Report (2022-23). nbcfdc.gov.in/nbcfdc/web/sites/default/files/2024-08/NBCFDC%20AR22-23.pdf
- NBCFDC. (2023, September). NBCFDC 30th Annual Report (2021-22). nbcfdc.gov.in/nbcfdc/web/sites/default/files/2023-09/NBCFDC%20AR%202021-22_compressed.pdf
- NBCFDC. (2023, September). NBCFDC 29th Annual Report (2020-21). nbcfdc.gov.in/nbcfdc/web/sites/default/files/2023-09/Annual%20Report%202020-21.pdf
- NBCFDC. (2023, September). NBCFDC 28th Annual Report (2019-20). nbcfdc.gov.in/nbcfdc/web/sites/default/files/2023-09/Annual%20Report%202019-20%20Final.pdf
- NBCFDC. (2022, March). Technology upgradation of Clusters under NBCFDC scheme. nbcfdc.gov.in/nbcfdc/web/sites/default/files/other-scheme/TechUpgradation-08.03.2022.pdf
- NBCFDC. (2023, September). Guidelines and Terms & Conditions for holding Awareness Camps and Publicity Grant to Channel Partners. nbcfdc.gov.in/nbcfdc/web/sites/default/files/2023-09/Awarness%20Camp_0.pdf
- NBCFDC. Achievements. https://nbcfdc.gov.in/nbcfdc/web/achivement
- NBCFDC. Corporate Profile. https://nbcfdc.gov.in/nbcfdc/web/corporate-profile
- NBCFDC. Other Scheme. https://nbcfdc.gov.in/nbcfdc/web/other-schemes
- Ministry of Social Justice & Empowerment Government of India. Schemes. https://socialjustice.gov.in/scheme-cat
- NBCFDC. Success Stories. https://nbcfdc.gov.in/nbcfdc/web/success_stories
About the contributor: Harshita Maheshwari is a research intern at IMPRI. She graduated with a Master of Public Administration, concentrating in Economic and Financial Policy from Cornell University and a Master of Arts in Applied Economics from Christ University.
Acknowledgement: The author sincerely thanks Aasthaba Jadeja and IMPRI fellows for their valuable contribution.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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