1. Body Corporate and Partnership firm having SME/Large scale setup in Haryana
2. Body Corporate and Partnership firm intending to setup one in State of Haryana
3. Maximum exposure per company: INR 2500.00 lakh (to a single company under all schemes) irrespective of size of project
Rate of interest
13.5% p.a. floating (rebate of 1% is available on timely payment of installment/interest)
Minimum Promoters Contribution
Minimum Security Margin
Debt Equity Ratio(Maximum)
0.20% of loan amount
0.50% of loan amount
5 to 8 years depending on the repayment capacity with initial moratorium of 1-2 years on repayment of the principal amount.
The acceptability level of Debt Equity Ratio depends on the risk perception in each case. Also, for the purpose of Debt Equity Ratio, the equity will consist of share capital, free reserves and preference share capital redeemable after ten years and interest-free unsecured loans from promoters/directors which are not to be withdrawn during the currency of the loan.
Processing Charge & Service tax
The processing fee for term loan cases of more than INR 5.00 Crores, the applicants can deposit 50% of the processing fee at the time of submission of application and balance 50% is required to be deposited before issue of sanction letter.
Service Tax and Education cess : As applicable from time to time
After the case has been accepted and appraisal initiated, the processing charges are not refundable. However, if the application is withdrawn after the acceptance of case but before starting the appraisal, the processing charges are refundable after retaining service tax & lump-sum fee of INR 5000/-.
The Term Loans extended by the Corporation are secured by way of mortgage of primary security. However, the Collateral Security is obtained to further secure the loan and its quantum depends on the risk perception.
Verification & valuation of Colateral Security
The Corporation has a panel of valuers for carrying out verification and valuation of collateral security. Further it is to be cross checked by the officers of the Corporation. Following information will be required from the client:
- Sale deed/Conveyance deed of the proposed collateral security;
- Valuation report from an approved valuer;
- Search report from an Advocate; and
- Approved building plan in case of constructed property.
How to go about availing Finance Assistance?
Interaction with the 'Client' starts with the receipt of Application Form which is available on payment of INR 100/- at Head Office and/ or Branch Offices of the Corporation.
The applicants may download the Business Promotion Committee (BPC) format and applications form from the website www.hsiidc.org.in which is available under download section on homepage. However, the applicants are required to pay demand draft of INR 100/- in favour of HSIIDC Ltd. payable at Panchkula/Chandigarh at the time of submission of application along with processing fee
Following basic information is required at this stage:
- Processing charges & Service tax in the name of 'HSIIDC Limited' by demand draft;
- Certificate of Incorporation of the company along with a copy of Memorandum and Articles of Association;
- Background of Promoters including details of their assets and liabilities;
- In case of existing units, background of the unit, financial statements for the last three years;
- Financial statements of sister units for the last three years;
- Details of existing assistance availed outstanding, default etc.;
- Brief particulars of the proposed project including project cost and means of finance;
- Details of existing and proposed capacity;
- Location where project is proposed to be set up with complete details of land along with copies of letter of allotment/ sale deed/ conveyance deed;
- Details of proposed building along with site and building plan;
- Main machinery with details of suppliers. In case of second-hand machinery, the justification for such option, residual life of the machinery, year of its make/ manufacture, cost of similar new machinery etc.;
- Availability of raw material, its sources, price behavior etc.;
- Requirement of power, steam, water, pollution control;
- Technical tie up, if any;
- Marketing tie up, if any; and
- Copies of other Govt. approvals like permission from Pollution Control Board, SSI/SIA approval, permission for change of land use, approval for power load sanction etc. (However, these approvals can also be submitted at the time of appraisal)
The Application Form, duly filled in along with a soft copy complete with above information, may be submitted at Head Office or any Branch Office of the Corporation. The Application Form may also be submitted at Business Meets organised by the Corporation from time to time, which is duly notified through press advertisement in leading newspapers.
Acceptance of proposal for appraisal
After receipt of application, the proposal is placed before the Screening Committee, which consists of senior officers of the Corporation. The objective of this meeting is to examine as to whether the proposal can be accepted for detailed appraisal. This stage takes about a week's time.
Acceptance of proposal for appraisal during Business Meet
The Corporation organises Business Meets at Delhi Office or other branch offices throughout the year. The event is generally notified through press advertisements in advance or on the website of the Corporation hsiidc.org. Basic information as per the prescribed format is required for scrutiny of proposals during the Business Meets. The proposals accepted at Business Meets are straightway allotted for appraisal after approval of the Managing Director.
Detailed appraisal of proposal
After a proposal is accepted for appraisal, the detailed appraisal is carried out by the officer(s) of the Corporation to assess the technical feasibility and financial viability of the proposal. Among other things, the Appraising Officer(s) focus on the following points:
- Background of promoters, relevant experience, their resource position;
- Performance of the unit, if existing;
- Performance of sister units;
- Suitability and adequacy of land, location etc.;
- Adequacy of proposed building;
- Suitability and adequacy of proposed machinery;
- Background and reputation of the machinery suppliers;
- In case of second hand machinery, year of manufacture, residual life, cost of similar new machinery;
- Sources and availability of raw material, price data for the last 1- 2 years;
- Adequacy of utilities like water, steam, skilled manpower etc.
- Technical /Financial tie-ups;
- Adequacy of equipments for pollution control;
- Opinion of the banker on the promoters and conduct with them; and
- Marketing tie-ups, market overview with emphasis on demand and supply, other existing players, extent of competition and emerging competition, product price etc.
After the appraisal, the proposal is placed before the Advisory Committee which consists of members from within the organisation as well as outside experts. This Committee looks into various aspects of the appraised project, and its strengths & weaknesses to assess and determine the technical feasibility and financial viability of the proposal.
Sanction of Loan
Once the proposal is cleared by the Advisory Committee, it is placed before the authority competent to sanction the loan.
The time taken from the receipt of application till sanction of loan is about two months subject to expeditious and timely receipt of complete information from the applicant.
Issue of sanction letter
After approval by the competent authority, sanction letter containing special term & conditions as well as standard term & conditions is issued to the company alongwith estimated details of project cost.
Disbursement of sanctioned assistance
The process of disbursement of term loan starts with the acceptance of terms & conditions of sanction by the borrower as conveyed in the Sanction Letter and deposit of Imprest Money and Up-front Fee. The imprest Money is kept as an advance and its objective is to meet out the expenses the Corporation may have to incur during Monitoring and Follow-up. Presently, the Imprest money is charged INR 25000/- in loan cases up to INR 150 Lakh and INR 35000 in loan cases above INR 150 lakh. The objective of charging Up-front Fee is to meet the commitment cost of funds during disbursement stage. The rates at which up-front fee is charged are @ 0.5% of the loan amount & service tax thereon. Other requirements for first disbursement are as under:
(i) Legal Documentation: Legal Documentation precedes any disbursement. The details of Legal Documents required to be executed is supplied immediately after sanction. However, legal documents/resolutions required before disbursement are briefly explained hereunder:
General body resolutions under section 293(1)(a) to mortgage the assets of the company and under section 293(1)(d) regarding borrowing powers.
Board resolutions to approve loan application to HSIIDC, to accept terms and conditions of loan and authorising Directors to sign loan agreement, hypothecation deed, to open special current account , resolution to execute Tripartite Agreement with other joint lenders for creating pari-passu charge on fixed assets of the company, if applicable, and other documents under the common seal of the company.
(iii) Other documents
- Letter of acceptance duly signed by the Director as per BOD resolution.
- Up-to-date certified copy of the Memorandum & Articles of Association.
- Particulars of immovable property with copies of Mutation, Jambandi, sale-deed, search report etc. both in respect of Company's property as well as collateral security.
- Site plan (Aks-shajra) on tracing cloth indicating the total area and surroundings on all sides.
- Statement of share capital certified by the Statutory Auditors.
- Copy of the latest audited Balance Sheet.
- Copy of the Returns of allotment filed with the Registrar of Companies.
- Copy of the Resolutions filed and registered with the Registrar of Companies under section 192 of the Companies Act.
- Search report by Statutory Auditor regarding charges filed with the Registrar of Companies.
- Full particulars of guarantors' alongwith details of immovable & movable assets, PAN/GIR No. and two passport size photographs.
- No objection certificate under section 281 of the Income Tax Act for creation of charge.
- Permission for conversion of land usage, if applicable, from the competent authority.
- Details of shareholding of guarantors i.e. number of shares, Folio No., Certificate Nos., and Distinctive Nos.
- No lien letter from the bank in respect of special current account.
Details of stamp papers (Non Judicial) for various documents ( to be purchased from Haryana only).
- Stamp paper for INR 10.00 in the name of company for loan agreement.
- Stamp paper for INR 10.00 in the name of company for undertaking.
- Stamp paper for INR 10.00 (three Nos) in the joint name of all promoters/directors/guarantors for undertaking.
- Stamp paper for INR 20.00 in the name of company for tripartite agreement, if applicable.
- Stamp paper for INR 300.00 in the name of company for power of attorney.
- Stamp paper for INR 10.00 in the name of company for letter of undertaking.
- Stamp paper for INR 20.00 in the name of company for hypothecation deed.
- Stamp paper for INR 10.00 in the name of authorised Director/Managing Director (with co's name) authorised to create mortgage for declaration & undertaking.
- Stamp paper for INR 15.00 in the joint name of all guarantors for guarantee bond.
- Stamp paper for INR 10.00 in the name of owner of collateral security for declaration and undertaking.
Note: The loanee units may bring the Common Seal & the Letter Heads of the company at the time of execution of loan documents. The execution of legal documents is done at Head office of the Corporation.
- Form 8 is required to be filed with the Registrar of Companies immediately after execution of legal documents and proof of filing to be furnished to the Corporation together with original receipt issued by Registrar of Companies.
- Deposit of imprest money which is INR 25000/- for loan up to INR 150.00 lakh, INR 35000 for loans above INR 150 Lakh.
- Deposit of upfront fee @ 0.5% of loan amount & service tax thereon
- Compliance with the terms of sanction;
- Certificate from Statutory Auditors of the company, indicating the investments made under different heads and sources of funds, as per the prescribed format.
- Physical verification by the officer(s) of the Corporation of the security created and verification of books of accounts, bank statements and copies of bills etc.;
- In case of change in machinery suppliers/ specifications, the following is required: reasons for change of supplier/ specifications;
- Quotations of machinery along with catalogue and details of customers to whom new suppliers have supplied similar machinery.
- Valuation and verification of collateral security by the Officer of the Corporation;
- Insurance cover note for the insurance of assets created, the name of the Corporation should be endorsed in the insurance cover note; and
- Details of suppliers in whose favour the disbursement is to be released.
- For subsequent disbursements, the steps under legal documentation are not to be repeated except charge registration, if pending and insurance of assets.
- The disbursement of loan is linked to the extent of promoters contribution raised and security created at site as per scheme. The extent of disbursement is restricted to lower of amount worked out on the basis of promoters& contribution raised and security created.
- The applicant company is required to submit progress report during implementation of the project in prescribed format.