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Module: General Practice

Q153: The DAY-NRLM provides an Interest Subvention Scheme for Women SHGs. Which of the following statements correctly describes the effective interest rate for prompt payees in 2026?

A
Loans up to ₹3 Lakh are available at 7% p.a., with an additional 3% subvention on prompt repayment, making the effective rate 4%.
B
Loans up to ₹5 Lakh are available at a flat 5% interest rate irrespective of repayment behavior.
C
Loans up to ₹2 Lakh are interest-free (0%) for the first year.
D
All SHG loans are linked to the Repo Rate with no government subvention.
✅ Correct Answer: A
🎯 Quick Answer:
Effective rate is 4% for prompt repayment on loans up to ₹3 Lakh.
Concept Definition: Interest Subvention Scheme (ISS). Structural Breakdown: 1. Base Subvention: Banks lend to Women SHGs at 7% per annum for loans up to ₹3 Lakh.
2. Prompt Repayment Incentive (PRI): If the SHG repays on time, an additional subvention of 3% is provided.
3. Net Rate: 7% (Base) - 3% (Incentive) = 4% effective interest rate for the borrower.
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