Banks in Bengal on Friday approved the state government’s Bhavishyat Credit Card scheme, under which youth between 18 and 45 years will be provided loans up to Rs 5 lakh to set up small businesses.

The state government will provide subsidies up to 10 per cent of the project cost with a maximum cap of Rs 25,000 and will also provide a guarantee of up to 15 per cent. The government had allocated Rs 350 crore in the state budget for the scheme.

“Today banks have unanimously decided to adopt the scheme. The SOP (standard operating procedure) is already done and the portal is ready,” Amit Mitra, principal chief adviser to Bengal chief minister Mamata Banerjee, said on Friday following the State Level Banker Committee meeting.

Mitra said while the state is expected to provide a 15 per cent guarantee in instances of default, Sidbi is expected to provide an 85 per cent guarantee under the Credit Gurantee Trust for SMEs.

“The risk is completely guaranteed. So, there is a comfort level for banks.”

He added the scheme is expected to be brought under the next Duare Sarkar camp starting April 1, 2023.

Mitra also said that the lenders in the state are expected to breach the credit offtake target for the MSME sector. Against a target of Rs 1.10 lakh crore, the lending to the sector could be Rs 1.14 lakh crore.

“If this amount is lent out and it goes towards investment in the form of plant and machinery, there will be a multiplier effect on the economy,” said Mitra.

He further said that lending to the Self-Help Groups (SHGs) is expected to reach Rs 20,000 crore and may even surpass this with a few days in March still remaining.

Mitra cited a study by the National Bank for Agriculture and Rural Development to claim the priority sector annual credit plan has gone up 10 per cent to Rs 2.7 lakh crore in the next fiscal year.