NSIC Bill Discounting Scheme

National Small Industries Corporation (NSIC) is a certified enterprise working under the Ministry of MSMEs. 

NSIC was incorporated to promote the growth of MSMEs by supporting them through marketing, finance technology and other support services.

One such scheme through which NSIC provides credit support is the bill discounting scheme.

The Bill Discounting scheme covers the discounting of bills raised by MSMEs on state and central government departments or undertakings, reputed public or private limited companies.

Only those enterprises engaged in the manufacturing or service industry are eligible for this scheme, which means that the traders will not be eligible.

Meaning of Bill Discounting

Bill discounting is a short-term finance arrangement where the seller receives its amounts outstanding in advance (before the due date) from a bank or other financial institutions such as NBFCs, after deducting interest and other charges as a discount. At the end of the credit period, the seller needs to repay the bank.

NSIC Bill discounting scheme

As discussed, the scheme covers:

1. MSME sellers involved in manufacturing or service activities (seller unit).

2. The purchasers are state and central government departments or undertakings, reputed public or private limited companies (purchaser unit).

The scheme grants varying annual limits to the purchasers and sellers. The applicant unit needs to approach NSIC for the annual sanction limits. 

The purchaser unit should provide details in the prescribed form, including the list of MSMEs providing goods or services.

On the other hand, the seller unit should give the list of bills drawn on the purchaser unit, which the purchaser unit must approve.

Additionally, the seller or purchaser unit should provide a bank guarantee in favour of NSIC. Once approved, the bills will be discounted, and funds will be provided.

Only bills with a credit period of less than 180 days are considered.

Salient features of the NSIC Bill discounting scheme

NSIC charges nominal interest (up to the usance period) and additional interest if the payment is not received within the usance period.

Discount or Interest Rate up to credit or usance period:

Normal Interest (% per annum)	Micro (%)	Small (%)	Medium (%)
For MSME units having SME 1 Rating	6.5	7	8
For MSME units having SME 2 Rating	7	7.5	8
Other Units	7.5	8	8

An additional rate of interest at the rate of 1.25% per quarter after the credit or usance period will be charged if the amount is not paid within that period. 

This additional interest will be over and above the normal interest specified in the table above. 

For all proposals sanctioned under this scheme, the following processing fee will be applicable:

Processing Fees (% per annum)	Micro (%)	Small (%)	Medium (%)
Fresh sanction	1	1	1
Renewals	0.5	1	1

NSIC will also require security in the form of a bank or personal guarantee before it disburses the funds. 

Bank guarantees must be equivalent to the value of assistance and issued by approved banks. The personal guarantee should include the guarantee of the proprietor, partner of firms or directors of the company.

How to obtain NSIC Bill discounting facility?

To avail NSIC bill discounting facility, an enterprise shall apply to the concerned NSIC office and submit the application form along with prescribed documents. The form requires you to provide the following information:

1. Amount of assistance/funds needed.
2. Background details of the applicant (e.g. constitution, year of establishment).
3. Statutory registration details (e.g. GST, PAN).
4. Details of sister concern, if any.
5. Details of proprietor, partners or director.
6. Nature of business (e.g. product manufactured or services rendered).
7. Details of order received from eligible seller unit.
8. Security details (e.g. bank or personal guarantee).

The following documents need to be enclosed along with the application form

1. Photographs of each proprietor, partner or director.
2. Statutory Certificates.
3. Statement of personal assets and liabilities (self-attested).
4. Copy of board resolution stating to deal with NSIC for financial assistance required.
5. a. Last year’s audited financial statements.
   b. Provisional/current financial statements.
   c. Projected financial statements.
6. Sanction letter issued by the bank for the credit limit.