NSIC Raw Material Assistance: Eligibility, Fees, Apply

Reviewed by: WeCredit Research Team

The National Small Industries Corporation (NSIC) Raw Material Assistance (RMA) scheme helps a manufacturing or service MSME buy raw material on credit of up to 180 days. NSIC pays your supplier, you repay NSIC with interest, and a bank guarantee from an approved bank secures the limit.

NSIC Raw Material Assistance at a Glance

Item	What NSIC states
What it finances	Purchase of raw material, both indigenous and imported
Who it is for	Manufacturing and service MSMEs with a Udyam Registration Certificate. Trading is not allowed
Credit period	Up to 180 days
Security	Bank guarantee from an approved bank. Assistance goes up to 95% of the guarantee value
Maximum exposure to one unit	Rs. 1,000 lakh for a manufacturing unit and Rs. 600 lakh for a service unit
Interest rate	9.25% to 10.75% a year for assistance availed on or after 10 July 2026, depending on your SME rating
Processing fee	1.0% a year on new sanctions
Where to apply	Nearest NSIC branch office, on the prescribed form

How the Scheme Works

Under RMA, NSIC sanctions a limit keeping in view the raw material needs of your unit, its financial position and the security available in the form of a bank guarantee. When you need material, you send NSIC a proforma invoice, the original invoice or a material receipt note along with a request to release payment. NSIC then pays the supplier directly. The money never reaches your account.

NSIC says it can facilitate purchases in two ways: against advance payment to the supplier, and on credit. The credit route gives you up to 180 days to repay. NSIC also lists supply at bulk supplier rates and shared discounts among the benefits.

Who Can Apply (Eligibility)

• You must run a manufacturing or service MSME. Trading activity is not covered.
• You must hold a Udyam Registration Certificate.
• You must be able to provide a bank guarantee from a bank approved by NSIC for the limit you want.
• Your financial position must support the limit NSIC sanctions. NSIC assesses your financial position at appraisal, so ask the branch which financials it will want.

If you do not yet hold the certificate, complete your Udyam registration before approaching NSIC, because eligibility starts there.

How Much Can You Get

NSIC sets a maximum exposure for each unit, and a higher ceiling for a group of two or more companies. The limit you actually receive depends on your raw material requirement, your finances and the guarantee you furnish.

Unit type	Single unit ceiling	Group ceiling
Manufacturing	Rs. 1,000 lakh	Rs. 2,000 lakh
Service	Rs. 600 lakh	Rs. 1,500 lakh
Infrastructure	Rs. 800 lakh	Rs. 1,000 lakh

Each limit is valid for one year. NSIC can renew it for a further year if the conduct of your account was satisfactory during the year that just ended.

Interest, Fees and Penalties

NSIC’s scheme page lists the rates for assistance availed on or after 10 July 2026. The range across all categories is 9.25% to 10.75% a year. A unit with a valid SME 1 rating gets the lowest rates, a unit with a valid SME 2 rating pays slightly more, and all other units pay the highest band. The exact rate for your category is shown in the table on the NSIC scheme page, so read it there before you decide.

Charge	What NSIC states
Interest	9.25% to 10.75% a year, lowest for units with a valid SME 1 rating and highest for other units without an SME 1 or SME 2 rating
Concessional rate condition	The lower rates for SME 1 and SME 2 rated units apply only if you repay within the stipulated 180 days. Otherwise you are charged the rate for other units
Processing fee, new sanction	1.0% a year
Processing fee, renewal	0.5% or 1.0% a year, depending on the category in NSIC’s fee table
Penal charge	1.25% per quarter on any amount outstanding beyond 180 days, over and above normal interest

Worked Example: What One Purchase Costs

This example uses an assumed rate and an assumed guarantee, only to show how the charges stack up. Your sanction letter will show your actual figures.

• A small fabrication unit furnishes a bank guarantee of Rs. 20 lakh. Assistance can go up to 95% of the guarantee value, so the limit is up to Rs. 19 lakh.
• The unit asks NSIC to pay a steel supplier Rs. 10 lakh against an invoice.
• Assume an interest rate of 9.75% a year, which sits inside NSIC’s published range. If the unit repays the full Rs. 10 lakh after exactly 180 days, interest is about Rs. 48,082 (Rs. 10,00,000 x 9.75% x 180 / 365).
• If the unit instead repays 90 days late, the penal charge of 1.25% per quarter adds about Rs. 12,500 for each quarter the amount stays outstanding beyond 180 days, on top of normal interest. The unit would also lose any concessional rate, as the rate for other units applies.

The processing fee of 1.0% a year on a new sanction is charged separately. Ask the branch office whether it is calculated on the sanctioned limit, and add it to your cost before comparing with a bank cash credit.

Documents to Keep Ready

NSIC publishes a checklist titled “Documents to be enclosed with Application form” on its scheme page. Download it from there or collect it from the branch, because it is the list the branch will check you against. At a minimum, keep these ready:

• The NSIC RMA application form, filled in (available as PDF or Word from the scheme page, or free at a branch)
• Your Udyam Registration Certificate
• The bank guarantee from an approved bank for the limit you want
• For each purchase: a proforma invoice, original invoice or material receipt note, with a written request to release payment to the supplier

How to Apply: Step by Step

1. Confirm you hold a valid Udyam certificate and that your activity is manufacturing or services, not trading.
2. Download the RMA application form and the document checklist from the NSIC scheme page at nsic.co.in, or collect them free of charge from an NSIC branch office.
3. Speak to a bank NSIC approves about the guarantee you will need to furnish, sized to the limit you want, so it is ready when NSIC sanctions your limit.
4. Submit the filled form and documents at your nearest NSIC branch office. The scheme page describes an application at the branch, not an online filing.
5. NSIC carries out a preliminary appraisal and inspects your unit.
6. NSIC sanctions a limit, and you sign an agreement with NSIC.
7. Send NSIC the invoice and a payment request for each purchase. NSIC releases the payment to your supplier, with credit of up to 180 days.
8. Repay within 180 days. If you need more time, ask your NSIC Zonal Head for an extension, which NSIC allows only if you are paying interest, the total outstanding is within the guarantee limit and the guarantee stays valid.

Timeline of One Limit Cycle

Stage	What happens
Application	Form and documents go to the nearest NSIC branch
Appraisal	Preliminary appraisal and unit inspection by NSIC
Sanction and agreement	Limit sanctioned, agreement signed with NSIC
Each purchase	You submit the invoice, NSIC pays the supplier, up to 180 days of credit
Limit year	The limit is valid for one year
Renewal	One more year if account conduct was satisfactory

Sanction time depends on appraisal and the documents you submit, so ask the branch for an expected timeline when you apply.

Is This Scheme Right for You? Checklist

• You manufacture goods or provide a service. You do not resell goods.
• Raw material is your biggest recurring cost, and your suppliers will take payment from NSIC.
• You can get a bank guarantee from an approved bank for the limit you need.
• You expect to repay within 180 days from the sale of what you make.
• You have a Udyam certificate.

If you cannot answer yes to all five, a different product may suit you better.

What Can Slow or Stop an Application

Issue	Why it matters	What to do
Trading activity	NSIC states trading is not allowed under this scheme	Apply only for material you will process or use to deliver a service
No Udyam certificate	Eligibility requires a Udyam Registration Certificate	Register on the Udyam portal before applying
No bank guarantee	The limit is secured by a guarantee from an approved bank, and assistance goes up to 95% of its value	Ask your bank for a guarantee in the amount you need
Late repayment	You lose the concessional rate and pay 1.25% per quarter beyond 180 days	Plan repayment around your customers’ payment dates
Poor account conduct	Renewal needs satisfactory conduct in the previous year	Repay on time and keep the guarantee valid

Alternatives to Consider

Feature	NSIC RMA	Bank working capital loan	Credit guarantee-backed loan
What you get	Raw material paid for by NSIC, up to 180 days	Cash credit or overdraft in your account	A bank loan backed by a guarantee fund
Security	Bank guarantee from an approved bank	Set by the bank	Guarantee cover for the lender, terms set by the bank
Who decides terms	NSIC	The bank	The bank

If you need credit for general working capital and not only raw material, a bank loan backed by the CGTMSE credit guarantee scheme is another route, and the bank decides whether to lend.

Common Mistakes

• Expecting cash in your account. NSIC pays your supplier directly.
• Applying as a trader. Trading is outside the scheme.
• Assuming the interest is the only cost. Add the processing fee and the bank’s charge for the guarantee.
• Overlooking the 180-day mark. Delay costs you the concessional rate and adds a penal charge.
• Relying on old summaries. Some older ministry pages mention 90 days of credit, while the current NSIC scheme page says up to 180 days. Use the NSIC page.

Where This Fits Among Government Schemes

RMA is one scheme among many that a small business can use. To compare it with other credit routes, browse the government loan schemes hub. NSIC alone decides your sanction and your terms.

Frequently Asked Questions

What is the NSIC Raw Material Assistance scheme?

It is an NSIC scheme that finances the purchase of raw material, both indigenous and imported, for MSMEs. NSIC pays your supplier and you repay within the credit period.

Who is eligible for NSIC raw material assistance?

Any manufacturing or service MSME holding a Udyam Registration Certificate can apply. Trading activity is not allowed.

How long is the credit period?

Up to 180 days. NSIC may extend it on your request with the consent of the Zonal Head, provided you serve interest, the outstanding stays within the guarantee limit and the guarantee remains valid.

What is the interest rate?

For assistance availed on or after 10 July 2026, NSIC’s rates range from 9.25% to 10.75% a year, depending on your SME rating. Units that repay within 180 days keep the concessional rate.

Is a bank guarantee compulsory?

Yes. NSIC takes security as a bank guarantee from an approved bank, and assistance can go up to 95% of the guarantee value.

Can I apply online?

NSIC’s scheme page asks you to fill the prescribed form and submit it to the nearest NSIC branch office. You can download the form from nsic.co.in or collect it free at a branch.

Does WeCredit sanction NSIC loans?

No. WeCredit does not sanction government scheme loans. NSIC decides your limit and terms, so confirm details with the branch and on the official page.