Financial Services

Eligibility conditions

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

Financing Parameters:

Rate of interest	13.5% p.a. floating (rebate of 1% is available on timely payment of installment/interest)
Minimum Promoters Contribution	30%
Minimum Security Margin	25%
Debt Equity Ratio(Maximum)	1.5:1
Processing Fee	0.20% of loan amount
Upfront fee	0.50% of loan amount
Repayment period	5 to 8 years depending on the repayment capacity with initial moratorium of 1-2 years on repayment of the principal amount.

Note:

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share capital redeemable after ten years and interest-free unsecured loans from promoters/directors which are not to be withdrawn during the currency of the loan.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 However, if the application is withdrawn after the acceptance of case but before starting the appraisal, the processing charges are refundable after retaining service tax & lump-sum fee of INR 5000/-.

Collateral Security

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:

(ii) Resolutions

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.

Other Requirements:

• 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.

1. For subsequent disbursements, the steps under legal documentation are not to be repeated except charge registration, if pending and insurance of assets.
2. 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.
3. The applicant company is required to submit progress report during implementation of the project in prescribed format.

Eligibility Criteria

The financial assistance under this scheme is available to the existing profit-making companies for acquiring machinery & equipment for expansion/ modernisation/ balancing. The company should satisfy the following eligibility norms to be covered under the scheme.

• The unit should be in operation for last four years and should be in profits and/ or declared dividend in the preceding two financial years;
• The current ratio should preferably be 1.33:1 or above;
• The cost of proposed equipment normally should not be more than 50% of the existing gross block;
• The applicant company should not be in default with the Institutions/ Banks; and
• The proposed equipment should be separately identifiable.

Financing Parameters

Maximum assistance	INR 500 lakhs per proposal
Repayment period	2 to 5 years
Rate of interest	12.5% p.a. floating
Processing Fee	0.20% of loan amount
Upfront fee	0.50% of loan amount

Service Tax & Processing Charges

Procedure is same as applicable under General term loan

How to go about availing Financial assistance under this scheme

The Applicant is required to submit Application on the prescribed Performa which is available without any payment at Head Office and Branch Offices of the Corporation. The Application, along with processing charges & Service tax may be submitted at Head Office or Branch Office or in the Business Meets, which are organised from time to time along with the following information:

• Balance sheets for the last 4 years;
• Details of proposed equipments;
• Justification for the proposed equipments and likely benefits of the scheme;
• Details of existing borrowings with repayment schedule;
• Profitability Projections for the next five years;

Acceptance of application

The proposal is analysed with main focus on past performance of the unit and the advantages the proposed equipment will provide in its operations. It is accepted for appraisal immediately if it fulfills the basic parameters laid down in the scheme.

Appraisal

A quick appraisal is carried out with special emphasis on the following points:

• Performance of the unit;
• Credit record with other institutions;
• Justification for the proposed equipment;
• Incremental benefits of the scheme;
• Overall viability of the scheme;

Verification and valuation of collateral security

Procedure is same as under General Term Loan.

Sanction

A decision with regard to sanction of loan is taken by the Competent Authority on the recommendations of the Advisory Committee. The entire process takes about one month after receipt of requisite information.

Disbursement of sanctioned assistance

The process of disbursement of EFS 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 objective of Imprest Money and Up-front Fee has been explained earlier under the General Term Loan Scheme. Other requirements are given as under:

Legal Documentation

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:

Resolutions required

General body resolutions under section 293(1)(a) of Companies act 1956 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 the Director(s) to sign loan agreement, hypothecation deed, creation of equitable mortgage, to open special current account, for creation of charge on fixed assets of the company and other documents under the common seal of the company.

Other documents

As detailed under the General Term Loan.

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 for meeting shortfall in promoters' contribution.
• 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 hypothecation deed.
• 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.

In case of creation/ extention of charge on existing fixed assets of the Company, the following stamp papers are required.

• 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 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.
• Forms 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.

Other requirements:

• 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 Up-front fee @ 0.5% of loan amount.
• Compliance with the terms of sanction;
• Certificate from the Statutory Auditors of the company indicating the investments made under different heads and sources of funds as per the prescribed format.
• Physical verification of assets and checking of books of accounts and invoices/bills by the officers of the Corporation;
• Valuation and verification of collateral security, if any;
• Insurance of assets already created;

Details of suppliers in whose favour disbursement is to be released.

For subsequent disbursements, the steps under legal documentation are not repeated except for 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.

Letter of Credit

The Corporation has made arrangements with some Commercial banks for opening Letter of Credits for the purchase of machinery from India or abroad against term loan. This scheme aims at reducing the efforts of the client to approach the bank to open the Letter of Credit, which is a de-novo process, after the sanction of loan from HSIIDC.

Margin

Minimum 15% against disbursement eligibility and 25% on the balance amount of Letter of Credit. However, the Corporation ensures tie-up of total funds required for retiring the Letter of Credit.

Service Charges

The Corporation levies service charges which are shared with the Commercial Banks through whom the Letter of Credit is opened. The HSIIDC's charges are comparable with those of the Commercial Banks in case the Letter of Credit is directly opened through them. The details of charges are as under:

Letter of Credit up to Rs 100.00 lakh	1% of the amount of Letter of Credit alongwith applicable service tax
Letter of Credit above Rs 100.00 lakh	@ Double the FEDAI* rates alongwith applicable service tax

*stands for Foreign Exchange Dealers Association of India, which is a Confederation of Foreign Exchange Dealers for deciding various charges on services provided by the members.

Procedure for opening of Letter of Credit

Following information is required for opening the Letter of Credit:

Where the amount of Letter of Credit is not covered by the eligibility of disbursement, following additional information is required:

Letter of Comfort

The Corporation also issues Letter of Comfort in favour of Commercial Banks to facilitate opening of the Letter of Credit by the latter, in case the client so wishes. Since it amounts to commitment of funds by the Corporation, service charges @ 0.5% of the amount of Letter of Comfort are charged. The Letter of Comfort is issued on the request of the client and the amount is restricted to the extent of disbursement eligibility.

 

Penalties:

In case of any default, the rate of interest applicable to general term loan is chargeable for the balance loan amount and it becomes the documented rate of interest for all intents and purposes. In addition, penal interest is charged @ 3% p.a. over and above this revised documented rate on the defaulted amount for the period of default.

Under this scheme, a Line of Credit, valid for one year is granted to existing borrowers who have created first charge on its fixed assets in favour of the Corporation, for purchase of separately identifiable machinery/ equipments obviating appraisal procedure and giving flexibility in identifying the machinery/ equipments at a later stage.

Eligibility Conditions:

• The unit should be an existing loanee unit of the Corporation and first charge on its fixed assets should be created in favour of the Corporation.
• The unit should be in operation for last four years and should be in profits and/ or declared dividend in the preceding two financial years;
• The current ratio should preferably be 1.33:1 or above;
• Average cash accruals during the last two years should be sufficient to service existing and proposed loan.
• Overall debt equity ratio must not exceed 1.5:1
• The cost of proposed equipment normally should not be more than 50% of the existing gross block;
• The applicant company should not be in default with the Institutions/ Banks; and
• The proposed equipment should be separately identifiable.

Financing Parameters:

Minimum promoters' contribution	25%
Maximum over all debt equity for the company including LOC ratio	1.5:1
Cost of additional equipments	Not more than 50% of existing net block of unit.
Repayment period	5-1/2 Years including moratorium period 6 months.
Rate of Interest	12.5% p.a. (floating)
Upfront fee	0.50% p.a. of loan amount.

 

Minimum net worth and cash accruals	Amount of line of credit
Minimum net worth- INR 5 crore Minimum cash accruals - INR 100 lacs	INR 250 lacs
Minimum networth- INR 4 crore Minimum cash accruals INR 75 lacs	INR 200 lacs
Minimum networth INR 3 crore Minimum cash accruals INR 50 lacs	INR 150 lacs

Penalties:

In case of any default, the rate of interest applicable to general term loan is chargeable for the balance loan amount and it becomes the documented rate of interest for all intents and purposes. In addition, penal interest is charged @ 3% p.a. over and above this revised documented rate on the defaulted amount for the period of default.

Procedure is same as under Equipment Finance Scheme.

The corporation has recently introduced a scheme of corporate loan under which assistance of INR 500 lacs is granted which can be utilised within six months from date of sanction for:

• Expansion / modernization / balancing equipment / technology tie ups fees along with meeting of working capital requirements, if any.
• Takeover of loans of other institutions coupled with additional assistance, if any. However, the assistance shall not cover new projects.
• Meeting the expenses relating to general corporate needs of unforeseen nature such as VRS/Bonus/IT payments etc.

Eligibility Criteria:

1. The unit, situated in Haryana should be carrying out commercial operations for more than last five years.
2. The company should be making profits for the last three years.
3. Minimum net-worth and cash accruals of the company as per the last audited balance sheet should be INR 5 crore and INR 1 crore respectively (the revaluation reserves shall not be considered towards net-worth).
4. The company should not be in default of principal/interest to banks/financial institutions and its account should have been classified as `Standard Asset' by its lenders.
5. Current ratio of the company as per last audited balance sheet should not be less than 1:1.
6. Interest coverage ratio of the company as per last audited balance sheet should not be less than 2:1.
7. Companies not assisted by HSIIDC but otherwise meeting all the eligibility criteria would also be considered.

Financing Parameters:

Repayment period	3-1/2 to 5-1/2 years with initial moratorium period of 6-12 months
Promoter's contribution	Minimum 30%
Debt Equity Ratio	1.5:1 (including proposed loan)
Rate of interest	As applicable to normal term loans.
Processing and up front fee	As applicable in normal term loans cases.

Security:

1. Demand promissory note.

2. Extension of first charge on fixed assets of the company with asset coverage ratio (including proposed loan and fixed assets) of not less than 1.5 times.

3. Exclusive charge on fixed assets to be acquired under Corporate Loan Scheme.

4. Security margin not below 25%.

5. Personal guarantee of promoters.

Disbursement of Sanctioned assistance :

Procedure is same as under General Term Loan.

Sensing the needs of borrowers, HSIIDC has introduced a Scheme for construction of Commercial complexes. The assistance under the scheme is provided for:

1. Acquisition of land and construction of building thereon.

2. Interior decoration, air conditioning, communication facilities for commercial complexes and shopping malls.

3. Acquisition of racks for storage, weigh bridges, conveyor system, lift for show rooms, departmental stores, sales outlets etc. Products for sale will not be considered for financing.

4. In case of existing functional commercial complexes, renovation cost and cost of acquisition of additional establishment could also be considered for financial assistance.

5. Any other required facilities connected with the commercial complexes, can also be considered for financing.

The land should be in name of Company or its promoter and same be mortgaged with the Corporation.

Financing Parameters

Maximum assistance	INR 2500 lacs.
Minimum promoter's contribution	30%
Maximum debt equity ratio	1:1
Minimum Security Margin	35%
Processing Fee	0.20% of loan amount
Upfront fee	0.50% of loan amount
Repayment Period	upto 8 years with moratorium period of 18 months
Rate of Interest	14.5% p.a floating (Before 1% timely payment rebate)

Scheme for Financing Industrial Infrastructure in Industrial Estates developed by HSIIDC & HUDA

Purpose:

Assistance to be provided under the scheme for the following:

• Lifts, Interior decoration, air conditioning, Fire fighting equipments, communication facilities etc. required for the building.
• In case of existing buildings, renovation cost and cost of acquisition of additional establishment could also be considered.
• Any other required facilities connected with the infrastructure projects.

Eligibility:

• The land for such infrastructure project should be in name of company or its promoter and falling with in the HSIIDC/HUDA area and the same be mortgaged with the Corporation.
• The company/concern shall obtain NOC from estate Division of the concerned agency to the effect that the unit is otherwise eligible for leasing as per EMP-2005 and there is no default of the conditions of the allotment.
• The company will undertake that while leasing out any part of the building constructed/developed by the company, a tripartite agreement will be executed amongst the Corporation borrower and lessee and will get the tripartite agreement approved from the Corporation.
• The company shell open a separate Escrow account in which the rent on account of leasing out of any part of the building constructed/developed by the Corporation shall be deposited directly by the lessee and where from the repayment of installments due to the Corporation will automatically be credited to the Corporation on due dates

Financing Parameters

Maximum assistance	INR 1500 lacs enhanced to INR 2500 lacs.
Minimum promoter's contribution	30%
Maximum debt equity ratio	1:5:1
Minimum Security Margin	35%
Processing Fee	0.20% of loan amount
Upfront fee	0.50% of loan amount
Repayment Period	Up to 8 years with moratorium period of 18 months
Rate of Interest	14.5% p.a floating (Before 1% timely payment rebate)

As the very title suggests, the loan under this category is provided for meeting the working capital requirements including shortfall in margin money for working capital. It is a medium term maturity loan.

Eligibility: Only those units which have been sanctioned/ disbursed term loan by the Corporation.

Limit for Loan:

SSI	INR 125.00 lakh
Non SSI	INR 200.00 lakh

Financing Parameters

Repayment period	5-1/2 years including six months moratorium
Maximum assistance (SSI) (Non SSI)	INR 125 lakhs INR 200 lakhs
Rate of Interest	13.5% p.a. floating (applicable both for SSI/Non-SSI units) (before 1% timely payment rebate)
Processing fee	0.20% of loan amount
Upfront fee	0.50% of loan amount

Collateral Security:

1)	Where security margin on fixed assets against loans secured by charges on such fixed assets including WCTL is less than 50% .	Collateral security equal to 100% of the WCTL in the form of fixed assets preferably situated in Haryana as well as extension of charge on the existing fixed assets.
2)	Where security margin on fixed assets against loans secured by charges on such fixed assets including WCTL is more than 50%.	Extension of charge on existing fixed assets of the company as well as collateral security upto 30% of the WCTL considering merits of each case.

 

How to go about availing Financial assistance under WCTL scheme

The Client is required to submit an Application on the letter-head of the company along with Processing Charges & Service tax. The Application may be submitted at Head Office or Branch office or in the Business Meets, which are organized from time to time, along with following information:

• Balance sheets of the company for the last 3 years.
• Copy of the CMA data.
• Details of working capital limits sanctioned/availed from the Bank and credit reports.
• Details of collateral security being offered along with valuation thereof.
• Undertaking that the funds shall be used only for the working capital purposes.
• After receipt of proposal, the case is placed before the screening committee for acceptance for appraisal. Constitution of the BPC has been discussed earlier. The proposals accepted in the Business Meets chaired by MD/HSIIDC are not subject to ratification by BPC.

Appraisal of proposal

A brief appraisal is carried, which is aimed at the following points:

• Justification for the working capital.
• Analysis of the performance of the unit.
• Credit record with other Institutions/Banks.
• Overall viability of the scheme.

Verification and valuation of collateral security

Procedure is same as under General Term Loan.

Disbursement of snactioned assistance

The process of disbursement of 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 objective of Imprest Money and Up-front Fee has been explained earlier. Other requirements are as under:

Legal Documentation: 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:

1. Other requirements:

Resolutions by the Board of Directors of the Company

As discussed under General Term Loan

2. 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 Ccompany for 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.
• In case of creation/ extension of charge on existing fixed assets of the Company, the following stamp papers are required.
• Stamp paper for INR 10.00 in the name of authorised Director/Managing Director (with co's name) authorised to create mortgage and for declaration & undertaking.
• 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.

Forms 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;
• Deposit of Up-front fee @ 0.5% of loan amount
• Compliance with the terms of sanction;
• Valuation and verification of collateral security, if any;
• Insurance of assets already created/mortgaged for the said loan;

For subsequent disbursements, the steps under legal documentation are not repeated except for charge registration, if pending.

The Corporation has a scheme for take over of loans of other Institutions / Banks, along sanctioning of loan for expansion/modernization schemes of such companies. This will facilitate dealings of the company with one institution; improve the asset quality of the Corporation, while reducing the cost of funds for the borrowers.

The scheme shall be subject to following parameters:-

• All the parameters of general loan scheme such as Debt Equity Ratio, loan limit shall be applicable for this scheme also. The assets coverage ratio for the loan being taken over should not be less than 1.5 times.
• The unit should be in existence and profits at least for the last one year.
• The unit should be regular with the institutions/banks from where it has availed financial assistance and the account should have been classified as 'standard assets
• The collateral security as may have been given to other institution/banks shall be obtained.
• The entire loan should be taken over and loan thus taken over shall be secured by way of first charge on fixed assets of the company.
• The payment should be directly released in favour of institution/banks which has extended the financial assistance.

However, this take-over of loans will not be in isolation and shall be resorted to only when company has scheme for additional loan for expansion/ modernisation.

Once financial assistance is extended to any client, sharing of information relating to the project is important. The Corporation has a system to follow-up the progress of the case at all stages. Following information, which may be useful to both lender and the borrower, is required to be submitted :

During implementation of the project

Quarterly progress reports of the project are required in the prescribed format.

After Implementation of the Project the client is required to comply with the following:

• Annual renewal of Insurance cover of the assets;
• Submission of half yearly reports (quarterly reports in case of listed Companies) indicating actual performance vis-a-vis projections in prescribed format;
• Submission of audited annual accounts;
• Physical verification of the assets by the officer(s) of the Corporation at least twice in a year;
• Balance confirmation as on 31st March of every year, till the assistance is fully repaid.
• Intimation of change in Directors/promoters, if any
• Annual statement of net worth of guarantors
• Conduct quarterly Board meetings in the presence of Nominee Director

Recoveries:

The Corporation's capability to serve its clients in the best possible manner is dependent upon timely recoveries of its advances to the borrowers. The clients should be aware that their loan accounts are classified in three categories as per the guidelines issued by the RBI. These categories are:-

• Standard Assets
• Sub-standard Assets
• Doubtful Assets

The classification of loan account in any of the above categories and provisioning in lieu thereof is to be done by the Corporation in accordance with the guidelines issued by the RBI from time to time. However, the clients must understand that while the provisions are just nominal in case of standard assets, these keeps on going up with the loan accounts becoming sub-standard and doubtful assets in line with the aging of default as well as realizable security cover available to the Corporation towards repayment of interest and principal amounts. It is, therefore, crucial both for the Corporation as well as the client to ensure that his account does not become a non-performing asset (NPA) and remains in the Standard Asset category.

Recovery Schedule

The repayment of principal and interest thereon is required to be made in quarterly installments falling due on 30^th April, 31^st July, 31^st Oct. and 31^st January in a financial year (these dates may be different in old cases). The rationale behind recovering the due amount on a quarterly basis lies in the Corporations liability to service the loans/ refinance it avails from banks/ refinancing institutions for its clients.

The repayment schedule of installments is worked out on the basis of tenure of the loan at the time of first disbursement. However, there are also cases where a client may not need to avail some portion of the sanctioned loan and he may be in a position to complete his project without really needing the balance unutilised assistance. In such cases, the client will be allowed the benefit of re-fixation of his installments only once in accordance with the amount of loan actually disbursed and the tenure of the loan subject to his furnishing an undertaking that the balance unutilised component of the loan be cancelled. However, in all such cases, the amount paid by them towards initial installments till the date he makes such request will not be recalculated for re-fixing the installment schedule. In other words, while revising the repayment installment amount, retrospective benefit will not be admissible.

Accountd

Normally, the client is supposed to know the amount of installment falling due on a particular date as per the repayment schedule fixed at the time of first disbursement or re-fixed subsequently and he is expected to adhere to the repayment schedule. However, for the convenience of the client, the Corporation also has a system whereby the client would be served with a Demand Notice just before repayment of the installment amount falls due. Similarly, he would also be receiving his account statement after realisation of the credit of the payment made by him. However, the client may please note that any failure on the part of the Corporation to send such a Demand Notice would not provide him with the plea that he could not make the payment as he had not received such Demand Notice. The account statement is sent on a regular basis.

Timely credit to HSIIDC's Account

The borrowers may please note that the repayment to HSIIDC is taken into account on the day the amount gets credited to the HSIIDC's account and not on the day he issues a cheque/ draft payable towards such repayment. Hence, the clients would be well advised to send their drafts/ cheques well in time if they want to avail of the interest rebate or save on penal interest for the period of delay involved in realisation of the amount to the HSIIDC's account. The borrowers are also advised that they must issue the cheque/ draft/ pay order payable at the station where it is sent for realisation i.e. branch office or head office, whatever the case may be.

Rebate and Penalities

1. Rebate:- The Corporation has a scheme to allow interest rebate which is linked with the timely repayments of interest and principal. The rebate presently being allowed is 1% on interest rate and the benefit of this is extended in the third quarter, after watching the regularity of payment of interest and principal for last two quarters. The scheme of interest rebate is subject to review from time to time. While the interest rebate may be lowered at some point of time, it may as well be discontinued altogether at some time.
2. Penalties:- The objective of penal interest is to act as a deterrent for default and encourage timely payments. In case of default, penal interest @ 3% p.a. over and above the documented rate is charged on the defaulted amount for the period of default.

Other stringent recovey measures

In cases of consistent and deliberate defaults, and where the Corporation has failed to effect its recoveries after exhausting all persuasive methods, the Corporation is competent to proceed under Section 29 of the SFCs Act and resort to coercive action there under. It may be clarified here that invoking SFCs Act for the recoveries is done as a matter of last resort but let the borrowers also note that the assets of the company can be taken over under the provisions of this Act and disposed off for recovery of its dues.

Pre-payment of Term Loan or Any Other type of Financial Assistance:

Generally, pre-payment of loans is discouraged. This is because the refinancing institutions from whom HSIIDC raises resources also do not accept pre-payments. Moreover, it upsets the financing plans of the Corporation besides resulting in higher costs very often. Wherever the Corporation agrees to accept pre-payment of loan, the charges are 1% of pre-paid amount. However, acceptance of pre-payment is at the sole discretion of the Corporation.

Rescheduling of Loan:

Generally, rescheduling of loans is discouraged and not allowed unless there are genuine and compelling reasons. Wherever it is agreed in principle, the request of the borrower must be supported with the following documents:

• Financial statements for the last two years and current year;
• Projections for the remaining period of loan;
• Reasons for seeking rescheduling; and
• Proposal for rescheduling.

Rate of Interest in case of Re-scheduling

• First Re-scheduling: Documented rate or the rate prevailing at the time of acceptance of the rescheduling proposal, whichever is higher.
• Second Re-scheduling: 1% above the documented rate or 1% above the rate prevailing at the time of rescheduling, whichever is higher, on the rescheduled amount for the period of rescheduling.
• Re-scheduling beyond currency period: 0.5% above the rate of interest applicable for the respective rescheduling(s) within the existing currency period for the loan as mentioned above, for the extended period.

One time settlement will be done in all loan ( term loan/ working capital term loan/ bridge loan ) cases which are categorised either Doubtful/loss on the terms and conditions detailed hereunder:-

1. Willful defaulters as detailed subsequently shall not be entertained under these guidelines for the settlement of loan account.
2. The categories of loan accounts under the guidelines are defined as under and basis of status of loan account would be taken on the date as and when the party approaches for settlement of loan account.

Definition of doubtful account as per this policy :-

Doubtful loan account is one, where the principal remained overdue for a period exceeding two years.

Accounts may be settled by waiving of entire penal plus 100% component of compounded interest and 50% of simple interest. However, the waiver should not exceed the interest outstanding.

Category	Benefits Permissible
I.
(a) Doubtful loan account (Category-A)	Accounts may be settled by waiving off entire penal interest plus 25% of component of compounded interest. However, the waiver shall not exceed 25% of total outstanding.
Where the loan account has remained doubtful for less than three years.
(b) Doubtful Loan Account (Category-B)	Accounts may be settled by waiving off entire penal interest plus 50% of component of compounded interest but waiver should not be more than 50% of total outstanding.
Where the loan account has remained doubtful for more than three years but less than five years.
(c) Doubtful Loan Account (Category-C)	Accounts may be settled by waiving of entire penal plus 100% component of compounded interest
Where the loan account has remained doubtful for more than five years.
However, the amount recoverable shall not be less than 90% of realisable value of primary and collateral security available with the Corporation in all the above categories. The assessment shall not be more than six months old on the date of submission of settlement proposal.
Doubtful/Loss Loan Account (Category-D)
(d) Under this category, those cases will fall where the primary and collateral securities have already been disposed off by the Corporation. There will be no verification of assets and the eligibility under the scheme will not be linked with personal assets of borrowers/guarantors.	Accounts may be settled by waiving of entire penal plus 100% component of compounded interest and 50% of simple interest. However, the waiver should not exceed the interest outstanding.
The amount of waiver under the scheme shall be restricted to the amount payable by the party and would be applicable to category 'A', 'B', 'C' and 'D' of the One Time Settlement Scheme only.
II.
Units in possession of the Corporation for over three years but could not be disposed off in spite of four attempts and no other security is available.	Accounts may be settled by charging principal and misc. alongwith normal refinance rate or equivalent thereto prevailing at the time of loan advance.
III.
A. Where the units have been affected by the natural calamities such as fire, floor, riots, strikes and are lying closed and the borrower is interested to adjust their account. B. Where the primary security has been disposed off but the collateral security is available and he borrower is interested to adjust the account without disposal off collateral security irrespective of its assessed value. C. Where the unit is lying closed for one year or more and the party wants to adjust its loan account.	The units falling in any of the three categories approaches for settlement, the accounts may be settled by allowing the benefit of waiver of penal interest provided the entire outstanding is liquidated within a period of six months from the date of settlement. Such benefit, is however, to be restricted to the extent of interest outstanding and no portion of principal amount shall be waived off.
IV. LOSS PORTFOLIO/ R.C./R.C. STAYED CASES
A. Where the primary security and collateral security stands disposed off by the Corporation. B. Those cases may be considered for settlement where the Revenue Authorities have declared the means of the borrowers and guarantors in the case as irrecoverable and have furnished certificate/statement related to the same.	Principal plus misc. and 1/3rd of the simple interest in terms of Mortgage Deed on the amount outstanding to the recovered and no verification of personal assets may be insisted upon. An affidavit about the present means of the promoters is to be given by promoters/guarantors.
Non-Applicability of OTS to Willful defaulters. As per the guidelines of the RBI the following cases will fall under the definition of willful defaulters:- a. Deliberate non-payment of the dues despite adequate cash flow and good net worth. b. Siphoning off of funds to the detriment of the defaulting unit. c. Assets financed have either not been purchased or have been sold and proceeds have been mis-utilised. d. Misrepresentation/falsification of records. e. Disposal/removal of securities without bank's knowledge. f. Fraudulent transactions by the borrowers. The RBI guidelines further state that the identification of the willful defaulters should be made keeping in view the track record of the borrowers and should not be decided on the basis of isolated transactions/incidents. The default to be categorized as willful must be intentional deliberate and calculate.
The financial statements/working results may be thoroughly scrutinized and the borrower company/unit will be considered as willful defaulter if it has sufficient cash accruals and the interest has been charged to its profit & loss account but has not been paid in spite of cash profits.

NOTES AND EXPLANATION.

a.

1. Borrowers interested to avail off the benefit under the scheme may apply to the concerned Branch Manager/ Head Office.
2. Calculations of amount payable by the borrowers under the guidelines may be done by adjusting/appropriating the amount received from the borrowers, amount of sale proceeds of unit and collateral/additional security first towards misc. expenses, then interest and thereafter principal amount. Further, in those cases where securities mortgaged to the Corporation are still in existence, the realizable value of the assets of the unit and collateral/additional security available with the Corporation should be given.

b.

The case is to be processed after receipt as upfront advance of :-

• 5% of outstanding in normal cases
• 10% of outstanding in possession taken cases;
• 15% of outstanding in possession taken cases where the company wants the possession to be restored immediately
• The amount deposited and will be kept in Sundry Deposit Account and credited to the party's account when the account is finally adjusted as per terms

1. All proposals would be scrutinized by a committee comprising of the senior officers of the Corporation
2. The committee will give recommendations which would be placed before the BoD for approval.
3. Prevailing normal rate of interest from time to time would be charged after expiry of currency of loan.
4. Maximum permissible repayment period of the OTS amount will be two years in cases where HSIIDC is the lead institution. However in cases where HFC is the lead institution, repayment period will be restricted to one year. 25% of the total amount worked out would be payable within 3 months & the balance 75%amount in equal quarterly installments over the repayment period as may be approved and the OTS amount so worked out would carry prevailing normal rate of interest w.e.f. the cut off date on which the OTS amount is worked out.
5. In no case principal and misc. expenses amount shall be waived off under these guidelines.
6. The relief shall be worked out from the date of last default persisting as per Mortgage Deed by recasting the account as per documented rate of interest.
7. The power to grant extension in the payment of settlement amount and condonation of delay subject to payment of interest by the parties for the intervening period shall rest with the Managing Director.
8. The benefit under the guidelines will be passed on only after receipt of full amount as per settlement.

Units available for sale

To recover its dues, Corporation takes over the assets mortgaged to it u/s 29 of SFC's Act/Court/AAIFR/BIFR and sell them on 'As is Where is' basis. For information of interested parties the list of such units is given below:

 

No unit is presently for sale.