01. Why corporation is not providing project reports for new lines of activities ?
Please contact development cell in the branch or at H.O. for guidance.The corporation provides necessary guidance and information for your proposed project. Project reports are be available at APITCO, Office of the Commissioner of Industries, SISI and such other oraganisations.
02. Why loan period shouldn't be fixed for 8 years and moratorium period be fixed for 2 years ?
Our corporation allows moratorium period from 6 months to 2 years in the case of term loans and 3 to 6 months in the case of working capital term loan. Loan period is fixed based on the Debt Service Coverage Ratio ranging from 3 to 8 years.
03. Can you consider financial assistance to Cinema Halls ?
Cinema Halls are eligible for financial assistance.
04. Do you accept corporate guarantee and share certificates as collateral security ?
No. The corporation does not accept corporate guarantee/share certificates as collateral security. However, corporation accepts Indira Vikas Patra, Kisan Vikas Patras, FDRs, Bank guarantee is also accepted in liew of collateral security.
05. Why corporation is not considering market value for valuation of collateral security ?
A via-media approach of taking average value of market rate and Sub-Registrars Rate is adopted for arriving the land value. While arriving the average rate, a weightage of 70% is assumed to market value and 30% to Sub-Registrar's rate. The average rate represent a fair market value for the land being accepted as Collateral Security.
06. When banker is considering both term loan and working capital term loan why is your corporation not adopting the same?
Ours is a term lending institution which gives term loans for acquiring fixed assets. We are also giving working capital term loans for the existing successful units which earned net profits for the last 2/3 years and established good repayment track record with FIs/Banks.
07. We feel that the corporation is using Sec.29 for recovering loans unjudiciously. Is it true ?
It is not correct. Powers U/S 29 are exercised after exhausting all other avenues to recover the dues. If the borrower is not able to pay the dues for the reasons beyond his control we do allow considerable time for repayment. However, if we feel that the account became sticky and downgraded and does not have potential for revival, then we resort to the action U/S 29 of SFCs Act.
a) Is there any preference for prompt repayment of Corporation dues?
Yes, if the repayment is prompt for 3 years we give preference for additional loans / short term loan at concessional interest rates.
b) In short term loans, my documents are already pledged with the bank now I want to close my loan with Bank and draw loan from your Corporation against the same document. Is it possible for your Corporation to entertain my request? If so how?
Yes, it is possible provided the banker agrees to send the title deeds and other related documents for completion of legal formalities at our end against release of loan amount directly to bank by our Corporation.
8. Do you consider Sanction of small loans
As per the norms in vogue we are considering financial assistance with a minimum quantum of Rs.10.00 lakhs and above.
9. What are the criteria for sanction of loan?
Corporation sanctions loans to industrial units, service sector units like nursing homes, commercial complexes, hotels, motels, road laying equipment, transport operators, excavators, tourist transport vehicles etc. The Corporation considers loans at 75% on the assets such as land, buildings and machinery subject to DER norms i.e., 3:1 for the projects up to Rs. 10.00 lakhs and 2:1 for project cost above Rs. 10.00 lakhs and for loan amount upto Rs 500 lakhs. The applicant shall offer collateral security ranging from 25% to 150% of the loan amount depending upon the type of the schemes and as guided by the lending policy.
10. Whether your Corporation considers tiny and small loans?
Corporation generally considers loans above Rs.10.00 lakhs for setting up tiny, small and medium scale Industries and service sector units for acquiring fixed assets like land, buildings and machinery.
11. How to apply?
The applicant has to submit a representation briefing about the project, availability of raw material, market tie-up if any etc. and experience of the promoter in that line and the security to be offered for the loan. The Branch Engineers and Project Appraisal Officers will assist the entrepreneur in this regard.
12. How much time will it take for sanction of loan?
After submission of the copies of necessary documents/papers such as unit’s land documents, building plan, machinery quotations, surety documents, relavent approvals. Our Corporation considers loans subject to viability of the scheme, with in 10 days if the loan is below Rs. 15 lakhs, 20 days if the loan is between Rs. 15.00 and 30.00 lakhs and 40 days if the loan is above Rs. 30 lakhs.
13. Whether you sanction loan without security?
No. All loans should be supported by collateral security as per the Corporation’s policy. The amount of collateral security varies depending on activity, scheme.
14. Do you accept guarantee by employees in lieu of collateral security?
No. We will not accept guarantee of Govt. employee in lieu of collateral security.
15. How loan can be drawn?
After execution of loan security documents and on fulfillment of disbursement conditions such as investment of initial capital, submission of approvals, loan will be released on the value of assets acquired subject to based on verification valuation of assets by the Branch Engineers of the corporation.
16. What are the benefits you are giving for women entrepreneurs?
Our Corporation considers financial assistance to eligible women entrepreneurs under MUN scheme. The project cost shall be below Rs. 10 lakhs. The applicant has to invest a minimum amount of 10% of the project cost. Term loan shall be considered at 65% and soft loan is considered at 25% of the project cost.The soft loan portion carries interest at 1% p.a and is given to bridge the gap in equity to encourage women entrepreneurs.
17. What are the concessions being considered for SC/ST entrepreneurs?
Financial assistance for starting industrial units is considered to eligible SC/ST entrepreneurs and bridge loan in lieu of Investment Subsidy / Margin Money is sanctioned.
18. Why the Corporation is seizing so many units?
The Corporation is initiating seizures only in cases where the loanees became chronic defaulters and they avoid payments willfully even after extending reasonable time for regularisation of accounts. Seizure of the assisted unit is the recourse taken aslast resort by the Corporation when inevitable.
19. How are the loanees to create charge in favour of Corporation?
The loanee shall deposit the original Registered Sale Deeds/documents and create charge by equitable mortgage of land and buildings and by hypothecation of machinery in favour of the Corporation.
a) Can you consider loans for housing?
No. Corporation cannot extend financial assistance for purchase of residential houses. However, financial assistance is extended for construction of commercial complexes / Residiential apartments.
b) What is the quantum of collateral security?
The quantum of collateral varies from 25% of loan amount to 100% in case of term loan and 150% for working capital term loan. If the unit is located in industrial estate, the collateral security is insisted on loan components other than land and buildings.
c) Do you accept share certificates towards collateral?
No. Corporation does not accept any share certificates towards collateral security. However, securities like India Vikas Patra, Kisan Vikas Patra, Bank Guarantee, FDRs, NSCs can be accepted.
d) Do you accept valuation by Chartered Engineers or by any other agency?
Corporation has qualified and experienced Engineers at Head Office and every Branch. Valuation is done by them alone.
e) How is valuation done ?
For land, the average of Sub-registrar and prevailing market value is taken for areas are other than industrial estates, and for the lands situated in Estates, the prevailing rates of APIIC are taken.
For Buildings, the schedule of rates of Corporation is applied and valuation is arrived as reduced by depreciation.
For Machinery, the present value is taken after applying depreciation based on age of machinery and present cost of machinery. For further details the Branch offices of the Corporation may be contacted.
f) It is said that interest rates are higher than that of Banks. Is it true ?
The interest rates of the Corporation are very competitive.
g) Is it not better to approach Commercial banks for both Term loan and Working Capital?
The Corporation, being a development bank, encourages 1st generation entrepreneurs, while banks generally are selective to finance to this category of entrepreneurs.
h) Is interest calculated based on diminishing balances?
Yes. The interest is calculated on diminishing balances at quarterly rests.
i) It is generally said, Corporation takes a long time to sanction loans? Is it true?
It is only a mis-conception. The sanctioning powers are adequately delegated at different levels and Corporation has good internal monitoring mechanism where periodical reviews of pending cases are done at different levels. Time schedules also are fixed for different types of loans and quantum of loans. In fact, the Corporation sanctions loans faster than banks.
j) There is also a feeling that Corporation is tough on recoveries. What do you say?
Corporation expects that every loanee should repay the dues as per the schedule of repayment stipulated. However, the deserving cases are given reasonable time for repayment but expects repayment within the quarter in which the interest installment fell due.
In deserving cases, the loans are rescheduled to enable entrepreneurs to repay the loan promptly. Seizing of units is restored to only where the defaults are willful and the entrepreneur is unable to revive the unit. This fact is amply seen from the fact that during the entire financial year only 5 units were seized and that too to safeguard the assets.
k) What are the special drives conducted for attracting entrepreneurs?
We periodically conduct development campaigns/programmes in different parts of the State Simultaneously during those seminars we normally give publicity to our new schemes in different media. We are continuously in touch with District Industries Center to know about the new SSI registrations new industrial units coming up in the district.
20. Do you finance for Dairy Farms, Goat forms, training schools, Computer coaching centres, shops, residential houses,Beauty Clinics etc.?
Corporation can not consider financial assistance to the above lines as they are not recognised as industries.
21. How long will it take to process the loan application ?
If the application is filed with the corporation with complete information, the application is sanctioned with in short period as under:
Branch Sanctions upto Rs 15 lakhs - 10 days
Zonal sanctions upto Rs 30 lakhs - 20 days
Head Office sanctions above Rs 30 lakhs - 45 days
22. What are your interest rates ?
Our interest rates are very competitive.
For details please see 'Interest rates' in this site.
23. How much of project outlay will you finance ?
Depending on the line of activity 65% to 75% of the cost of fixed assets like land, buildings and machinery provided in the project cost can be financed.
24. Do you accept Rural/ Agricultural property towards collateral security ?
No, we do not accept rural/agricultural properties as collateral security, except in special cases where the properties are highly marketable.
25. I do not have title deed for my property. But the property is recorded in my name in Gram Panchayat/Muncipal records. I can produce a Ownership Certificate from the authorities concerned. will you accept this property as collateral security ?
No, we can not accept the ownership certificate issued by Gram Panchayat/Muncipal authorities. We require registered title deeds of the properties for the creation of equitable mortgage.
26. Do you finance term loan and working capital loan to our new unit ?
We are presently operating the single window Scheme very selectively, where in both term loan on fixed assets and working capital term loan on current assets of a new unit are financed by the Corporation. we are only operating the working capital term loan scheme for financing of seasonal requirements of working capital. For details please refer the working capital term loan scheme.
27. Do you finance for the industries established in Rural areas ?
Yes. However the required collateral security to be offered shall be urban property.
28. When industrial assets are offered towards collateral security for additional loans such as working capital term loans, why is the value of machinery not considered in the valuation of assets ?
For the purpose of collateral security, our Corporation considers value of only land and buildings. The value of plant and machinery is not taken for the purpose of fulfillment of collateral security as per the policy of Corporation.
29. What is the loan period and how to repay ?
The loan period varies from 3 years to 8 years for general loans and specific loan period is fixed on case to case basis depending on debt service coverage ratio.