Answer Book question
Banks typically expect 10–25 percent of the project cost as promoter contribution (margin), depending on the scheme, the loan size and your profile. Some schemes reduce this for specific categories. The rest is bank finance plus any subsidy. The bank wants to see that you have something to lose.
Banks typically expect 10–25 percent of the project cost as promoter contribution (margin), depending on the scheme, the loan size and your profile. Some schemes reduce this for specific categories. The rest is bank finance plus any subsidy. The bank wants to see that you have something to lose.
Project cost ₹40 lakh. Bank asks 20 percent: ₹8 lakh own. Subsidy of ₹8 lakh under a scheme is treated as part of the financing but released after disbursement. Net bank loan ₹24 lakh. Promoter brings ₹8 lakh plus working capital outside the project.
Margin is the bank's cushion against project failure. It signals commitment and reduces loss-given-default. Subsidy usually cannot substitute for margin at sanction; it reduces the loan later.
Scheme-specific margin norms Whether subsidy is "back-ended" (released after) Source of margin. savings, family, not another loan Working capital outside the project cost
Counting the subsidy as your margin.
Scheme margin norms vary; Kerala Rising's compendium lists them per scheme. Verify current figures.
₹40 lakh project: ₹8 lakh margin, ₹32 lakh bank, ₹8 lakh subsidy credited later reducing the loan.
Some schemes for women, SC/ST, or specific sectors have lower margin norms. Check yours.
Identify the scheme Get its margin norm Source the margin from savings
Can I combine a bank loan and subsidy? What does a bank actually look for in a project report?
Loans, grants & subsidies
RBI directions on MSE collateral-free lending · CGTMSE scheme guidelines · MSMED Act 2006 delayed-payment provisions · MSME Samadhaan portal · Udyam registration portal · Kerala Industries Department scheme documents (verify current terms) Rates, limits and whether you may qualify change. Confirm with the official source. Ask Kerala Rising: Send us the quotation before you pay the advance. Or send us the bank's letter before you sign the mortgage. We will tell you what questions to ask. WhatsApp +1 443 595 9000 · keralarising.com Kerala Rising › Business › Finance · Business 4
This page is general orientation, not personal insurance, investment, medical, legal, lending, tax, or professional advice. Rules, rates, benefits, and claim or application decisions can change. Confirm the current position with the named official source and use a licensed or qualified professional where your situation requires one. Kerala Rising does not decide whether you may qualify, approve claims, or promise an outcome.