Personal Interest Subsidy Scheme — 4% Interest, Loans up to ₹5L

The Personal Interest Subsidy Scheme is a Government of Uttarakhand programme that makes bank credit cheaper for people building village-level enterprises. It has been run since 2016 by the Uttarakhand State Khadi and Village Industries Board, and its core promise is straightforward: borrow from a bank for a project costing up to ₹5 lakh, and the state absorbs most of the interest you would otherwise pay.

Rather than paying out a lump-sum grant, the scheme works through the banking system. The promoter carries an interest load of just 4% per year, while the Uttarakhand government subsidises the remaining interest, subject to a ceiling of 10%. That structure keeps the repayment obligation predictable and lowers the cost of project finance for small rural units.

The intended beneficiaries are clearly defined: permanent residents of Uttarakhand between 18 and 45 years who want to move into self-employment. This includes educated unemployed youth who have crossed the age limit for government service, candidates trained by an Industrial Training Institute (ITI) or a Polytechnic, women seeking an independent livelihood, and those who studied Village Industries as a subject at the 10+2 vocational level.

Enterprises must come up in a rural area and are expected to be built around locally available raw materials and the promoter's own working capacity. There is no application window to chase — the scheme runs on a rolling basis, and applications move through the District Village Industries Office.

• Bank-financed projects up to ₹5,00,000
• Entrepreneur pays interest of only 4% per year
• State subsidises the remaining interest, up to a maximum of 10%
• For permanent residents of Uttarakhand aged 18 to 45
• Project must be set up in a rural area
• Rolling applications — no closing date

An applicant has to meet the board's conditions on age, residency, personal background and project location.

• Age: between 18 and 45 years.
• Residency: must be a permanent resident of Uttarakhand.
• Promoter profile: the applicant should fall into at least one supported category — an educated unemployed youth who is no longer eligible for government service because of the age limit; someone trained by an Industrial Training Institute (ITI) or a Polytechnic; a woman interested in self-employment; or a candidate who has passed Vocational Education at the 10+2 level with Village Industries as a subject.
• Project location: the unit must be established in a rural area.

The published eligibility conditions do not mention DPIIT or MSME registration, and no minimum turnover or prior business experience is stated.

Personal Interest Subsidy Scheme — 4% Interest, Loans up to ₹5L is open to startups at any stage. It is open to startups registered anywhere in India.

Personal Interest Subsidy Scheme — 4% Interest, Loans up to ₹5L accepts applications on a rolling basis — there is no fixed cut-off date, so eligible startups can apply at any time. Because rolling programmes can pause without notice, confirm the window is still open on the official site before you start.

What this scheme delivers is cheaper credit rather than a direct cash payout.

• Interest subsidy on a bank loan: on a project financed by a bank, the promoter pays only 4% annual interest. The Government of Uttarakhand subsidises the remaining interest, subject to a maximum of 10%.
• Loan size: the maximum project cost that can be financed under this arrangement is ₹5,00,000.
• Access to formal credit: the scheme routes rural entrepreneurs into the banking system, which matters most in areas where other funding avenues are limited.
• Support for village industries: because projects are expected to use local raw materials, the spending stays within the local economy and strengthens the village industry ecosystem.
• A route to self-employment: the design deliberately favours educated unemployed youth and women, giving them a means to earn independently.

Personal Interest Subsidy Scheme — 4% Interest, Loans up to ₹5L is offered by Uttarakhand State Khadi and Village Industries Board, a government body. As a government-backed subsidy, it is publicly funded and open to eligible startups across India.

Assessment happens locally, in two layers — first within the department, then at the bank.

1. Applications are filed with the District Village Industries Office, which screens them.
2. A local committee — made up of Uttarakhand State Khadi and Village Industries Board officials and, where relevant, other district administration representatives — reviews each application. The committee verifies that eligibility criteria are met, judges how viable the proposed project is, and confirms that the required raw materials are locally available.
3. Applicants who clear this stage are guided into the bank loan application process, where the project is examined for financial feasibility.
4. Final selection depends on the bank sanctioning the project loan; after that, the department issues the final sanction for the interest differential.

Before you apply to Personal Interest Subsidy Scheme — 4% Interest, Loans up to ₹5L, keep the following documents ready:

• A pitch deck or short business plan describing the problem, product and traction
• Company registration documents and PAN
• Founder identification (PAN / Aadhaar) and brief profiles
• Recent financial statements or projections
• Product details — a demo, prototype or working link if available

Exact requirements are confirmed on the official application portal — treat this as a preparation checklist.

Personal Interest Subsidy Scheme — 4% Interest, Loans up to ₹5L is best suited for startups in India seeking non-dilutive funding of ₹5L. If that describes your startup, review the eligibility criteria above before applying.