Government of India, Ministry of Housing and Urban Poverty Alleviation has restructured the existing Swarna Jayanti Shahari Rozgar Yojana (SJSRY) and launched the NULM w.e.f. 24.09.2013. Scheme is operative in all districts headquarters irrespective is population and all cities with population of 1 lakh or more and that SJSRY was to remain operational till March 31, 2014.

The Self Employment Program (SEP) of NULM focuses on providing financial assistance through provision of interest subsidy on loans to support establishment of Individual & Group Enterprises and Self-Help Groups (SHGs) of urban poor. The erstwhile provision of capital subsidy for USEP (Urban Self Employment Program) and UWSP (Urban Women Self-Help Program) under SJSRY has been replaced by interest subsidy for loans to Individual enterprise (SEP-I), Group enterprise (SEP-G) and Self Help Groups (SEP-SHGs).

Deendayal Antyodaya Yojana - National Urban Livelihoods Mission (DAY-NULM): With a view to improving the livelihood opportunities for the poor in urban areas, Ministry of Housing and Urban Poverty Alleviation (UPA Division), Government of India vide their Office Memorandum No.K-14011/2/2012-UPA/FTS-5196 dated February 19, 2016 has decided to enhance the scope of National Urban Livelihoods Mission. The Mission with enhanced scope was renamed as "Deendayal Antyodaya Yojana - National Urban Livelihoods Mission (DAY-NULM)".

The Ministry of Housing & Urban Affairs, Government of India has amended the operational guidelines of Self-Employment Programme (SEP) under DAY-NULM. Now Reserve Bank of India vide its Master circular RB1/2018-19/89 FIDD.GSSD.CO.BC.No.11/09.16.03/2018-19 dated December 06, 2018 has consolidated relevant guidelines along with amendments as effected by the Ministry of Housing & Urban Affairs and same has been placed on the RBI website

PAiSA Portal: The Ministry of Housing and Urban Affairs since November 2018 incollaboration with the Allahabad Bank has also launched Portal for Affordable Credit and Interest Subvention Access (PAiSA Portal) for online processing and credit of interest subvented loans for beneficiaries under Self Employment Programme (SEP) component of the Deendayal Antyodaya Yojna - National Urban Livelihoods Mission (DAY-NULM).

The operational guidelines of the Self Employment Program (SEP): The SEP provides financial assistance to individuals/groups including street venders/hawkers of urban poor for setting up gainful self-employment ventures/ micro-enterprises, suited to their skills, training, aptitude and local conditions. The programme also supports Self Help Groups (SHGs) of urban poor to access easy credit from bank and avail interest subsidy on SHG loans. The SEP will also focus on technology, marketing and other support services to the above beneficiaries engaged in micro enterprises for their livelihoods and will also facilitate issuance of credit cards for working capital requirement of the entrepreneurs.

Educational Qualifications and Training Requirement: No minimum educational qualification is required for prospective beneficiaries under this component. However, where the identified activity for micro-enterprise development requires some special skills appropriate training must be provided to the beneficiaries before extending financial support.

Financial assistance should be extended only after the prospective beneficiary has acquired required skills for running the proposed micro-enterprise. In addition to skill training of the beneficiaries, the ULB will also arrange to conduct Entrepreneurship Development Program for 3-7 days for individual and group entrepreneurs.

Interest Subvention: The difference between 7% p.a. and the prevailing It is to be provided to banks under NULM. After disbursement of loan to the beneficiaries, the concerned branch of the bank will send details of disbursed loan cases to ULB along with details of interest subsidy amount.

Interest subsidy will be given only in case of timely repayment of loan. Suitable certification from banks will be obtained in this regard. An additional 3 percent interest subvention will be provided to all Women Self Help Groups (WSHGs) who repay their loan in time.


Eligibility for NULM Loan to Individual: An urban poor individual for setting up a micro-enterprise for self-employment. Beneficiary should have attained 18 years age.

Project Cost: The maximum unit project cost for individual micro-enterprises cases is Rs. 2.00 lakh.

Collateral on Bank Loan: No collateral required.  Banks are mandated not to accept collateral security in the cases of loans up to Rs. 5 lakh extended to units in the MSE Sector. Therefore, only the assets created would be hypothecated/mortgaged/pledged to banks for advancing loans.

Repayment: 5 to 7 years after initial moratorium of 6-18 months as per norms of the banks.

Margin Money: No margin money should be taken for a loan up to ₹ 50,000 and for higher amount loans, preferably 5% should be taken as margin money and it should in no case be more than 10% of the project cost.

Type of Loan Facility: Banks may extend finance to individuals for capital expenditure in the form of Term Loan and Working Capital loans through Cash Credit. Banks may also extend Composite Loans consisting of Capital Expenditure and Working Capital components, depending upon individual borrower’s requirement.


A Self Help Group (SHG) or members of an SHG constituted under DAYNULM or a group of urban poor for self-employment can avail benefit of subsidized loans under this component from any bank. The norms/ specifications for group based micro-enterprise loans are as follows:

Eligibility Criteria: The group enterprises should have minimum of Three (3) members with a minimum of 70% of the members from urban poor families. More than one person from the same family should not be included in the same group.

Age: All members of the group enterprise should have attained an age of 18 years at the time of applying for bank loan.

Project Cost: The group will be eligible for a maximum loan of Rs. 2 Lakh per member or Rs. 10 Lakh, whichever is lower.

Loan: Project cost less the beneficiary contribution (as specified by bank) would be made available as loan amount to the group enterprise by the bank.

Type of Loan: Loan can be extended either as a single loan to the group functioning as one borrowing unit or each member of the group can be provided individual loans up to 2 lakh and an overall cap of 10 lakh based on the principal of joint liability of the group.

Collateral on Bank Loan: No collateral guarantee required. Only assets created would be hypothecated/ mortgaged/ pledged to banks for advancing loans.  The banks may approach CGTMSE guarantee.

Repayment: 5 to 7 years after initial moratorium of 6-18 months as decided by banks.


The Community Organizers (COs) and professionals from Urban Local Body (ULB) will identify the prospective beneficiaries from among the urban poor. The beneficiaries may directly approach ULB or its representatives for assistance. Banks may also identify prospective beneficiaries at their end and forward such cases directly to ULB. The Banks may also use their empaneled Business Correspondents (BCs) and Business Facilitators (BFs) to increase the outreach. Due diligence will be undertaken as per the Banks’ policy, in this regard.

  1. The application for individual and group enterprise loans will be sponsored by the Urban Local Body (ULB) which will be the sponsoring agency for the individual and group enterprise.
  1. The ULB will create awareness regarding SEP to the prospective beneficiaries through mass media campaigns, Information Education and Communication (IEC) activities, advertisements in local newspapers, City Livelihoods Centres (CLCs) etc.
  1. The beneficiaries desirous of seeking financial assistance for setting up an enterprise can submit an application of intent to the concerned ULB officials on a plain paper with basic details viz: Name, Age, Contact details, Address, Aadhaar details (if any), amount of loan required, bank account number (if available), type of enterprise/ activity, category etc. The intent could also be sent by mail /post to the ULB office. The ULB shall accept such intents throughout the year.
  1. On submission/receipt of the intent from the beneficiary the respective ULB will enter the details in a register/or MIS if available and hence will generate a waiting list of beneficiaries. The ULB will issue an acknowledgement to the beneficiary with a unique registration number, which may be used as a reference number for tracking the status of application.
  1. ULB will call the beneficiaries in order of the waiting list to complete requisite documentation including filling of Loan Application Form (LAF), activity details, identity proof, address proof, bank account details etc. To verify the identity of the beneficiary, her/his Aadhar number will also be brought on record. The Loan Application Form (LAF) will contain basic data in respect of economic status of the beneficiary and her/his family.
  1. A Task Force constituted at ULB level will scrutinize the applications based on experience, skills, viability of activity, scope of the activity etc. Thereafter, the Task Force will shortlist the applications and call for interview of the applicants before recommending or rejecting the application or call for additional information from the applicant, if required.
  1. The Chief Executive Officer (CEO)/ Municipal Commissioner of ULB will be responsible to constitute the Task Force and will be the Chairman of the Task force. There could be more than 1 task force at ULB level depending upon the size/population of the ULB.

The indicative composition of the Task Force is as follows:

Sr. No. TASK Force at ULB level Role
1. Chief Executive Officer (CEO) ULB / Municipal Commissioner of ULB / or any representative authorized by CEO ULB Chairman
2. Lead District Manager (LDM) Member
3. City Project Officer (CPO), ULB / or any authorized representative of ULB Member Convener
4. Representative from District Industries Centre (DIC) Member
5. Senior Branch Managers (Max-2) of banks Member
6. Representatives (2) of Area Level Federation / City Level Federation Member


  1. The task force will then recommend the applications if found suitable, reject if found unsuitable or ask the beneficiary to submit further requisite information for re-examination on case to case basis.
  2. The case duly recommended by the task force will be forwarded by the ULB to the concerned banks for further processing. Such cases recommended by task force have to be processed by concerned banks within a time frame of 15 days. As these cases are already recommended by the task force, such cases should be rejected by banks only in exceptional circumstances.
  3. The banks will send a periodic report to the ULB on the status of the applications received. In case of MIS being used, the banks may be allowed to update the status of application online in addition to manual report.
  4. Banks may also directly accept the loan applications of urban poor beneficiaries on the basis of relevant documents as per the guidelines of Prime Minister MUDRA Yojana (PMMY) or any other such scheme without the need of having prior sponsoring from ULB. The banks can send details of such loans sanctioned by them to ULBs for confirmation of their eligibility for interest subsidy under DAY-NULM. Task Force constituted for scrutinizing applications should quickly clear these applications if they otherwise meet the criteria.

The ULB will prepare a data sheet of the applications recommended by the TASK force along with their status details of the sanction, disbursement and rejection (along with reasons) after validating the same with the respective banks. This data sheet will be sent to SULM on a monthly basis. The SULM will compile all the reports received from respective ULBs and will communicate to M/o HUPA on a monthly basis. The SULM may arrange for additional funds/professional assistance for the purpose of providing above services to CLCs.

Books Written by Abinash Mandilwar