Bank of INdia Schemes

7/31/2019 Bank of INdia Schemes'

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Star Laghu Udyog Suvidha Scheme - Features

Purpose:

To reward our loyal customers in meeting temporary liquidity constraints

Eligibility criteria

1. AAA and AA rated SSI borrowers having a sound track record with net

profits at least during the last 3 years and annual turnover in excess of Rs.50

lakhs.

2. The unit should be enjoying limits in excess of Rs.10 lacs..

Amount

50% of Regular limits subject to a max of Rs.50 lacs

Facility

a). Short Term Loans up to and inclusive of 180 days.

b). Channel Credit (both Suppliers & Dealers) by way of Discount of Inland

Bills of tenor

upto 180 daysc) Discount of Bills drawn under DA LCs of Prime Banks with usance not

exceeding 180

days

Margin

Finance against Stocks 25% Discount of Bills NIL

Interest rate

Short Term Loan facility upto and incl. of 180 days:

2.00% below rate applicable for "AAA" and "AA" rated customers.

Discount of Bills Accepted by Dealers/Beneficiaries of Services:

A further concession of 0.50% below the above rates


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SCHEME OF FINANCING FOR ENERGY EFFICIENCY PROJECTS

Purpose:

For acquiring/adopting Energy Saving Equipment and Energy Conservation

Measures.

Eligibility:

Saving on energy costs should be at least 150% of cost of servicing the

proposed term loan. Units should possess energy audit report (to be obtained

at their cost initially) issued by energy consultant/auditor accredited by

Bureau of Energy Efficiency, PCRA etc. or must have carried out similarassignment for other reputed companies.

Quantum of Loan

Upto 80 % of Project Cost, subject to a Maximum of Rs.1 crore. The cost of

equipment, cost for effecting modifications to the existing Plant & Machinery,

re-engineering the manufacturing process, and Interest during the

implementation period are included.

Project cost would also include Consultancy / Management fees, cost of energy

audit (once it is found that there is scope for substantial reduction in the

energy costs).

Overall Debt Equity of the unit (including this loan) should not exceed 4:1 for

SSI and 3:1 for Medium Sector units.

Repayment Period

Within 7 years including moratorium period of not more than 6 months. Canbe extended upto 10 years in exceptional cases. Average DSCR should be 1.3.

Security

--Hypothecation of equipment purchased.

--Extension of charge on existing assets, wherever available.


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--Energy Services Agreement (with ESCO) with Performance Guarantee by the

ESCO, wherever the services of an ESCO are engaged.

--Eligible Loans to SSI units to be covered under CGFTSI Scheme

National Equity Fund

Purpose

To meet gap in prescribed minimum promoters' contribution and/or in equity

Eligible Borrowers

Small entrepreneurs for setting up new projects in tiny / small scale sector and

rehabilitation of potentially viable sick SSI units irrespective of the location.

Existing tiny and small scale industrial units and service enterprises [tiny

enterprises would include all industrial units and service industries (except

Road Transport Operators) satisfying the investment ceiling prescribed for tiny

enterprises] undertaking expansion, modernization, technology up-gradation

and diversification can also be considered irrespective of the location.

Norms

Scheme operated through SFCs / twin function SIDCs / ScheduledCommercial Banks / Select Urban Co-operative Banks

Cost of project - Not to exceed Rs.5 million

Soft Loan limit - 25% of cost of project subject to a maximum of Rs.10,00,000

per project .

Service Charges - 5% p.a. on soft loan

Credit Linked Capital Subsidy Scheme (CLCSS) for Manufacturing Units

The objective of the scheme is to facilitate technology upgradation of Micro and

Small Manufacturing units in the specified products / sub-sectors as indicated

below by providing 15% capital subsidy for induction of proven technologies


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approved under the scheme, viz., leather and leather products including

footwear and garments; food processing( including Ice-cream

manufacturing);Information and Technology (Hardware);drugs and

pharmaceuticals; auto parts and components; electronic industry particularly

relating to design and measuring; glass and ceramic items including tiles; dyes

and intermediaries; toys; tyres; hand tools; bicycle parts; foundries - ferrous

and cast iron; and stone industry(including Marble Mining Industry).

Technology upgradation would ordinarily mean induction of state-of-art or near

state-of-the-art technology. It would also include installation of improved

environmental conditions, including work environment for the unit, installation

of improved packaging techniques, anti-pollution measures and energy

conservation machinery.

The ceiling on loans under the scheme is now Rs. 100 lakhs,

The admissible capital subsidy is to be calculated with reference to the

purchase price of plant & machinery, irrespective of the amount of term loan

disbursed to the beneficiary,

Credit Linked Capital Subsidy Scheme for Technology Upgradation of

Small Scale Textiles And Jute Industries (CLCS-TUFS)

The Scheme aims to encourage new/existing textile industrial units (includingCotton Ginning & Pressing Units) in the small scale sector for taking up

technology up-gradation and to modernize their production facilities by

providing subsidy under the Technology Up-gradation Fund Scheme.

Under the scheme, an option has been made available to the Small Scale

Textile Industries to avail either one time 15% Credit Linked Capital subsidy or

5% interest reimbursement under the Technology Upgradation Fund Scheme.

Units engaged in processing of textiles are eligible for further 10% Capital

Subsidyover and above the 5% interest subsidy for specific textile processing

machinery.

Medium and Large scale units are eligible for an interest subsidy of 5% on the

loans sanctioned for upgrading technology through new machinery which are

eligible under the scheme.

In respect of Power Loom Units in Small Scale Sector, the Credit Linked Capital

Subsidy would be 20%.


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SCHEME OF FINANCING FOR AKSHAY URJASHOPS

Akshay Urja Shops are retail outlets which wouldsell and service all Renewable Energy Devices andSystems including Solar Energy Products. Thenetwork of Akshay Urja Shops would cover all the

districts of the country. The Ministry of New andRenewable Energy (MNRE) will provide support tothe shops in terms of soft loans through banksand monthly recurring grant & incentive for firsttwo years of operation.

Eligible Beneficiaries

Private Entrepreneurs, Reputed NGOs and

Manufacturers Associations are eligible foropening AUSs. The applicant for opening a shopwill contact the concerned State Nodal Agency(SNA) and submit proposal for Akshay Urja Shopsin the prescribed format.Incentives would be

available only after sanction of Akshay Urja Shopby MNRE/SNA.

Validity of the scheme

Upto 31.03.2008

Eligible soft Loan

Maximum upto 85% of the cost of establishment oAkshay Urja Shop.

Maximum Loan amount Upto Rs. 10.00 Lakh as

Demand/Term Loan

Applicable Interest rate to beneficiaries 7% perannum

Repayment period 5 years (maximum) FinancialSupport for new shops Monthly recurring grant oRs.5,000/- per month towards manpower,


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electricity, telephone bills and other miscellaneousexpenses. Eligibility for recurring grant or

incentive will be worked out on the basis of theturnover for each six-month period. If the six-

monthly turnover falls below Rs.1.5 lakh during

the first year, or Rs.3 lakh during the second year,the shops will not be eligible for any grant orincentive.

An incentive of Rs5,000/- per month based onminimum turnover of Rs.50,000/- per monthduring the first year and Rs.1,00,000/- per monthduring the second year of operation. The shopswill not be eligible for any incentive for a particularmonth if the turnover is below the minimum

amount.

These will be available to the new shops for aperiod of 2 years after their establishment

BOI Artisan Credit Card (ACC)

Purpose

To provide adequate and timely assistance to artisans to meet their creditrequirements both investment needs as well as working capital. Investment

loans for purchase of tools/ Equipments by way of Demand Loan/Term Loanwith appropriate repayment schedule. The Scheme would be applicable both in

rural and urban areas.

Eligibility

1All existing artisan borrowers of the bank enjoying credit limits upto Rs.2

lakhs and having satisfactory dealings with the bank

2 All artisans involved in production/ manufacturing process

3Preference would be given to artisans registered with DevelopmentCommissioner (Handicrafts)

4Thrust in financing on cluster of artisans and artisans who have joined to

form Self-Help Groups (SHGs)5 Beneficiaries of other Government Sponsored schemes are not eligible

Issue of cards

A Photo Identity Card with sanctioned limit, validity period of credit facilities

along with a passbook incorporating Name, Address, Borrowing Limit, Validity


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Period, etc. will be issued.

Maximum Limit

Rs.2 lakhs per borrower.

Security

Hypothecation of Assets created out of Bank Finance.

Margin

Upto Rs.25,000/- : Nil Above Rs.25,000/- : 20% to 25%

Validity/Renewal of limits

Limit valid for 3 years subject to annual review. Annual review without asking

financial statements from the borrower but based on assessment of

performance by field inspection.

KVIC's Rural Employment Generation Program (REGP) -Margin Money Scheme

Eligible Projects

The Scheme is applicable to all New Village Industry Projects set up in "rural"

areas. Any extension or renovation of existing unit will not be eligible for this

facility. All activities which do not appear in the Negative List circulated by the

KVIC are eligible for financing under the scheme. Sponsoring of Projects is not

mandatory.

Any Village Industry including Coir Based projects (except those mentioned in

the negative list) located in the rural area which produces any goods or renders

any service with or without the use of power and in which the fixed capital

investment per head* of a full time artisan or worker does not exceed

Rs.1,00,000/- in Plain Areas and Rs.1,50,000/- in Hilly Areas. (* Capital


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Expenditure on Building/Workshed, Machinery & Furniture divided by Full

Time Employment created by the project). Rural Area would mean any area

classified as Village as per the revenue record of the State, irrespective of

population. It also includes an area even if classified as town, provided its

population does not exceed 20,000.

The KVIC would impart EDP Training to the beneficiary.

Eligible Borrowers

Only Individuals, Institutions, Co-Operative Societies, Trusts and SHGs (in

selected states) are eligible under the scheme. Firms, Companies, Joint

Ventures, Joint Borrowers, Co-Obligators, HUF are not eligible under the

scheme.

Ceiling Limit on Project CostRs.25 lacs per project. Cost of land should not be included in the project cost.

Borrower's Contribution

5% of project cost in case of SC/ST/OBC/Women/Physically Handicapped/Ex-

Servicemen/Minority Community and other weaker section borrowers.

10% of project cost in case other borrowers.

Margin MoneyFor projects costing upto Rs.10 lacs KVIC releases margin money to the extent

of 25%.

For projects costing above Rs.10 lacs, margin money released would be 25%

upto Rs.10 lacs and 10% in respect of amounts thereafter. (This would be 30%

and 10% in the case of SC/ST/OBC/Women/Physically Handicapped/Ex-

Servicemen/Minority Community and other weaker section borrowers and

those who are located in Hill Border and Tribal Areas, North Eastern Region,

Sikkim, Andaman & Nicobar Islands, Lakshadweep).

If the borrower's contribution is more than what is stipulated under this

scheme, the margin money released would be calculated on the actual bank

loan availed plus own contribution.


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BOI-LAGHU UDYAMI TRADE CARD(LUTC)Eligibility

All enterprenurs who are otherwise eligible for sanctionof working capital/Term loan for eligible activities definedunder Artisans ,Village industries Small Scale Industrialunits & Tiny units ,Small business, Professionals & Selemployed persons, Retail traders having 3 yearssatisfactorily conducted account and New accounts

where adequate collateral security is available.

Purpose

To meet credit requirement of above sectors including

Working Capital / Term Loan.

QUANTUM OF ADVANCE

Retail Trade Max.Rs.10 lakh(includingTL/WC)

Professional & SelfEmployed

Rs. 10 lakh( max. WC 2 lacsMedical Practitioners (Semi

urban/rural area)max-15lakh(WC-Rs 3 Lakh)

Small Business Maximum Rs.20

lakh(includingWC/TL)

Artisans, village industries,SME(manufacturing units)& Tiny Units

Maximum limit upto Rs.10lakh(including TL/WC )

INCENTIVES:

1 Automatic overlimit of 25%of working capital for 90days subject to availablility

2 Concession in rate of intrest of 0.50%for limit over Rs.2 lakhs3 20% increase in the limit on annual review may bepermitted to customers having satisfactory conduct oaccount.4 Maximum limit upto 20% of sales turnover as perBalance sheet or on the basis of credit in WC accountcan be allowed.


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Validity

LUTC will be valid up to 1 year & renewable after 1 year

Priyadarshini Yojana

With a view to empowering women by providing credit to women entrepreneurs,a scheme called Priyadarshini Yojana was launched in 1989. UnderPriyadarshini Yojana women entrepreneurs are extended credit facilities at

liberal terms and at concessional rate of interest, for economic activities. Thesalient features of the scheme at present are as follows:-

Item Features

Eligibility Women entrepreneurs, womenenterprises where women entrepreneurshold not less than 51% of the financialholding

Purpose For economic activities likei) Purchase of equipment, machinery,vehicle, furniture / fixtures etc. for

capital investment and working capitalneedsii) Agriculture & Allied activitiesiii) Education Loan

Loan Amount Need based depending upon project

cost/ turnover etc.

Margin For limit upto Rs.50,000/- - Nil For limitover Rs. 50,000/-15% to 20%.

Rate ointerest

0.5% less than applicable rate for limitsupto Rs.50,000. 1% less than applicable

rate for limits above Rs.50,000 (Thisinterest rate concession will beapplicable if no other interestconcession like DRI loan or crop loanwith concessional interest rate areavailable) Net interest concession in caseof education loan would not exceed 2 %.

Security No collateral for advances upto Rs.5


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lakh in case of small scale industrialunits, if a/c is covered under CGTSIthen no collateral including third partyguarantee for limit upto Rs.25 lakhs

Repayment Repayment schedule will be spread over

3 to 7 years depending upon the activity

The spirit of helping women folk in other types of advances by extending

concession in rate of interest was also implemented in following cases

Scheme

Concession in ROI for womenbeneficiariesOther than seniorcitizens/pensioners

Star PersonalLoan

0.50%

Star MortgageLoan

0.25%

Star Auto

Finance0.25%

Star HolidayLoan

0.50%

Star EducationLoan

0.50%

SCHEME OF FINANCING FOR SOLAR WATERHEATERS

Features of the scheme:

a. Eligible systems: Solar Water Heaters with both FlatPlate or Evacuated Tubular Collectors (of any size)

b. Borrowers: Any end user such as Individuals,institutions, non- commercial organizations/commercialorganizations (hotels, hospitals etc).

c. Loan amount: Upto 85% of the cost of the project asper cost indicated in the enclosed sheets. No separateceilings stipulated.


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In order to be eligible for claiming the Interest Subsidy,

the equipment has to be purchased frommanufacturers/suppliers approved by the MNES. Details

of such "approved" vendors is appended to this circular.

The borrowers are free to select vendors of their choicetaking into consideration competitive pricing, after salesservice etc.

d. Duration of loan Repayment starts 3 months after therelease of funds to the consumers. Maximum repaymentperiod Five years inclusive of this 3 months moratoriumperiod. Repayment would be in Equated MonthlyInstallments.

e. Rate of interest

2% p.a to domestic users,3% p.a to institutional users not availing accelerated

depreciation and5% p.a to industrial/commercial users availingdepreciation.Bank may charge penal interest as applicable in case odefault.

Star Dhanvanatri Suvidha

Purpose

Financial support for setting up of New Clinic,

Expansion of existing Clinic,

Purchase of Equipment, etc.

Purchase of vehicle for use by the borrower,

Purchase of Ambulance/Mobile Clinic

Quantum of Finance

Upto Rs.50 lacs.

Type of facility

Term Loan repayable in EMIs in maximum 7 years.


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Margin

Ranging upto 20% based on credit limit

Check List

IT Returns, Service Tax Returns, Copy of Bank Passbook/Statements, Proof of

Residence

Added Incentives

No processing fees on Retail loans for self/spouse;

Free International ATM-cum-Debit Card;

50% discount on annual maintenance charges for De-Mat accounts;

Free Internet Banking

FEATURES OF THE CGTMSE SCHEME FORMICRO & SMALL ENTERPRISES

i) Eligible Borrowers:

a)Eligible borrower would be new or existing Micro

and Small Enterprises (both Manufacturing andServices) to which credit facility has been provided

by the Bank without any collateral securityand/or third party guarantees. CollateralSecurity would mean any asset other thanbusiness asset.

b) Under the Credit Guarantee Scheme, theCGTMSE encourages composite credit beingextended to a single borrower by a MemberLending Institution of the CGTMSE. However

credit facilities extended by a Bank for a unitalready assisted by State/National LevelInstitutions are eligible for Guarantee Cover underthe scheme. Joint financing by two commercialBanks to a single borrower shall not be eligible for

guarantee cover. Joint Financing with SIDBI wouldhowever be eligible for guarantee cover.

c). All types of firms / companies or other legally


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constituted bodies, individual borrowers, smallbusinesses. Group lending through

SHGsnot eligible

ii) Eligible Accounts

a) Both Term Loan and Working Capital (both fundbased and non-fund based) can be covered.

b) Where the borrower is enjoying several distinctcredit facilities, one or more out of the same canbe covered upto the Eligible Amount (presentlyRs.100 lakhs) provided collateral security and 3rdparty guarantee are NOT obtained in suchaccount/s.

iii) Credit Guarantee Cover

a). The guarantee cover is subject to the overallceiling of Rs. 65 lakhs to Women Entrepreneurs

and units located in North East Region and Rs62.50 lakhs in respect of other categories.

b). The extent of guarantee cover is up to 85% othe credit facility ( up to Rs 5 lakhs) in respect o

Micro Enterprises, 80% of the credit facilitysubject to a maximum of Rs 40 lakhs to Women

Entrepreneurs /units located in North EastRegion(other than credit to Micro Enterprises)

The Guarantee Cover will commence from the dateof payment of guarantee fee.

The Guarantee Cover shall run through the entiretenure of the Term Credit / Composite Credit.

Where working capital alone is financed, thetenure of guarantee cover is fixed at 5 years.

Guarantee Fee has to be paid afresh for renewedguarantee cover thereafter for the next block of 5years.

Term loan sanctioned or WC limit sanctioned /renewed in a particular calendar quarter should becovered latest by the end of next calendar quarter.Thus, maximum time of 6 months and minimum


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time of 3 months is available for filing oapplication for Guarantee Cover.

iv) Additional credit facilities in respect oaccounts guaranteed under CGTMSE

Additional credit facilities sanctioned to unitscovered under CGTMSE will also be eligible forcover under the Scheme, if the unit is otherwiseeligible for cover after sanction of additionallimits.

Guarantee cover under the scheme is available fora maximum credit/loan ceiling of Rs.100 lakhseven though the actual loan/limit may be in

excess of Rs.100 lakhs, provided the account is

otherwise eligible for cover under the scheme.

v) Rehabilitation assistance:

For the unit covered under CGTMSE andbecoming sick due to factors beyond the control omanagement, assistance for rehabilitationextended by the Bank could also be covered under

the scheme provided the overall assistance iswithin the credit cap of Rs.100 lakhs.

vi) Guarantee Fee and Annual Service Fee

Guarantee Fee

One time guarantee fee at specified rate (currently1.5 per cent) of the credit facility sanctioned,(comprising term loan and / or working capitalfacility) shall be paid upfront to the CGTMSE with

the proviso that such applicable fee in respect oborrowers in the North Eastern region shall be

0.75%

Annual Service Fee:

Guarantee cover extended by CGTMSE in respectof any specific borrower shall be valid provided theBank pays an annual service fee of 0.75% on theSanctioned Limit of the borrowal account, as on


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March 31 of every year.

INDEX

Chapter Section Title PageNo(s)

I INTRODUCTION

1 Title and date of commencement 1

2 Definitions 1 - 2

II SCOPE AND EXTENT OF THE SCHEME

3 Guarantees by the Trust 3

4 Credit facilities eligible under the Scheme 3

5 Credit facilities not eligible under the Scheme 3 - 4

6 Agreement to be executed by the lending

institution

4

7 Responsibilities of lending institution under

the Scheme

4 - 5

III GUARANTEE FEE

8 Guarantee Fee and Annual Service Fee 6IV GUARANTEES

9 Extent of the guarantee 7

V CLAIMS

10 Invocation of guarantee 7 - 8

11 Subrogation of rights and recoveries onaccount of claims paid

8

VI MISCELLANEOUS

12 Appropriation of amount received from the

lending institutions

9

13 Appropriation of amount realised by thelending agency in respect of a credit facility

after the guarantee has been invoked

9

14 Trust's liability to be terminated in certain

cases

9 - 10

15 Returns and Inspections 10


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(ii) "Collateral security" means the security provided inaddition to the primary security, in connection with the credit facility

extended by a lending institution to a borrower.(iii) "Credit facility" means any financial assistance by way of

term loan and / or fund based and non-fund based working capital

(e.g. Bank Guarantee, Letter of credit etc) facilities extended by thelending institution to the eligible borrower. For the purpose ofcalculation of guarantee fee, the "credit facility extended" shall meanthe amount of financial assistance committed by the lendinginstitution to the borrower, whether disbursed or not. For thepurpose of the calculation of service fee, the credit facility extendedshall mean the credit facilities (both fund and non-fund based)covered under CGS and for which guarantee fee has been paid, as atMarch 31, of the relevant year.(iv) "Eligible borrower" means new or existing Micro and Small

Enterprises to which credit facility has been provided by the lending

institution without any collateral security and/or third partyguarantees.(v) 'Guarantee Cover' means maximum cover available pereligible borrower of the amount in default in respect of the credit

facility extended by the lending institution.(vi) "Lending institution(s)" means a commercial bank for the

time being included in the second Schedule to the Reserve Bank ofIndia Act, 1934 and Regional Rural Banks as may be specified by theTrust from time to time, or any other institution (s) as may be directed

by the Govt. of India from time to time. The Trust may, on review ofperformance, remove any of the lending institution from the list of

eligible institution.(vii) "Material date" means the date on which the guarantee fee onthe amount covered in respect of eligible borrower becomes payable bythe eligible institution to the Trust.

(viii) "Non Performing Assets" means an asset classified as a non-performing based on the instructions and guidelines issued by theReserve Bank ofIndia from time to time.(ix) "Primary security" in respect of a credit facility shall meanthe assets created out of the credit facility so extended

and/or existing unencumbered assets which are directly associatedwith the project or business for which the credit facility has been

extended.(x) "Prime Lending Rate" for a lending institution means the rate

so declared by that lending institution for the relevant time period /

duration for which the credit facility has been extended.(xi) "Scheme" means the Credit Guarantee Fund Scheme for

Micro and Small Enterprises


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(xii) "SIDBI" means the Small Industries Development Bank ofIndia, established under Small Industries Development Bank of India

Act, 1989 (39 of 1989).(xiii) 'Micro and Small Enterprises' As per the MSMED Act, 2006

an "enterprise" means an industrial undertaking or a business

concern or any other establishment, by whatever name called,engaged in the manufacture or production of goods, in any manner,pertaining to any industry specified in the First Schedule to theIndustries (Development and Regulation) Act, 1951 or engaged inproviding or rendering of any service or services; and "Micro andSmall Enterprises" are defined in 7.1.a.i) and ii) & in 7.1.b.i) and ii) ofthe said Act .

(xiv) "Tenure of guarantee cover" means the maximum period ofguarantee cover from Guarantee start date which shall run throughthe agreed tenure of the term credit and for a period of 5 years or

block of a 5 years where working capital facilities alone are extended

or loan termination date, which ever is earlier or such period as maybe specified by the Trust.(xv) "Trust" means the Credit Guarantee Fund Trust for Micro

and Small Enterprises set up by Government of India and SIDBI with

the purpose of guaranteeing credit facility (ies), extended by thelending institution(s) to the eligible borrowers.

CHAPTER II

SCOPE AND EXTENT OF THE SCHEME

3. Guarantees by the Trust(i.) Subject to the other provisions of the Scheme, the Trust

undertakes, in relation to credit facilities extended to an eligibleborrower from time to time by an eligible institution which hasentered into the necessary agreement for this purpose with the Trust,to provide a guarantee on account of the said credit facilities.(ii.) The Trust reserves the discretion to accept or reject any

proposal referred by the lending institution which otherwise satisfiesthe norms of the Scheme.

4. Credit facilities eligible under the Scheme:The Trust shall cover credit facilities (Fund based and/or Non fund

based) extended by Member Lending Institution(s) to a single eligibleborrower in the Micro and Small Enterprises sector for credit facility (i)not exceeding Rs. 50 lakh (Regional Rural Banks/Financial Institutions)and (ii) not exceeding Rs.100 lakh (Scheduled Commercial Banks andselect Financial Institutions) by way of term loan and/or working capital


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facilities on or after entering into an agreement with the Trust, withoutany collateral security and\or third party guarantees or such amount asmay be decided by the Trust from time to time.Provided that the lending institution applies for guarantee cover in

respect of credit proposals sanctioned in the quarter April-June, July-

September, October-December and January-March prior to expiry of thefollowing quarter viz. July-September, October-December, January-March and April-June respectively

Provided further that, as on the material date(i) The dues to the lending institution have

not become bad or doubtful of recovery; and / or(ii) The business or activity of the borrower for

which the credit facility was granted has not ceased; and / or(iii) The credit facility has not wholly or partly

been utilised for adjustment of any debts deemed bad or

doubtful of recovery, without obtaining a prior consent in thisregard from the Trust.

Credit facilities extended by more than one bank and/or financialinstitution jointly and/or separately to eligible borrower upto a maximum upto

Rs.100 lakh per borrower subject to ceiling amount of individual MLI or suchamount as may be specified by the Trust.

5. Credit facilities not eligible under the Scheme

The following credit facilities shall not be eligible for beingguaranteed under the Scheme: -

(i) Any credit facility in respect of which risks areadditionally covered under a scheme operated / administered byDeposit Insurance and Credit Guarantee Corporation or the ReserveBank of India, to the extent they are so covered.(ii) Any credit facility in respect of which risks are

additionally covered by Government or by any general insurer or anyother person or association of persons carrying on the business ofinsurance, guarantee or indemnity, to the extent they are so covered.(iii) Any credit facility, which does not conform to, or is in any

way inconsistent with, the provisions of any law, or with anydirectives or instructions issued by the Central Government or the

Reserve Bank ofIndia, which may, for the time being, be in force.(iv) Any credit facility granted to any borrower, who hasavailed himself of any other credit facility covered under this schemeor under the schemes mentioned in clause (i), (ii) and (iii) above, andwhere the lending institution has invoked the guarantee provided by

the Trust or under the schemes mentioned in clause (i), (ii) and (iii)


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above, but has not repaid any portion of the amount due to the Trustor under the schemes mentioned in clause (i), (ii) and (iii) above, as

the case may be, by reason of any default on the part of the borrowerin respect of that credit facility.

(v) Any credit facility which has been sanctioned by the

lending institution against collateral security and / or third partyguarantee.(vi) Any credit facility which has been sanctioned by thelending institution with interest rate more than 3% over the PrimeLending Rate (PLR) of the lending institution.

6. Agreement to be executed by the lending institutionA lending institution shall not be entitled to a guarantee in respect of

any eligible credit facility granted by it unless it has entered into an agreement

with the Trust in such form as may be required by the Trust for covering by

way of guarantee, under the Scheme all the eligible credit facilities granted bythe lending institution, for which provision has been made in the Scheme.

7. Responsibilities of lending institution under the scheme:

(i) The lending institution shall evaluate credit applicationsby using prudent banking judgement and shall use their businessdiscretion / due diligence in selecting commercially viable proposalsand conduct the account(s) of the borrowers with normal bankingprudence.

(ii) The lending institution shall closely monitor the borroweraccount.

(iii) The lending institution shall safeguard the primarysecurities taken from the borrower in respect of the credit facility ingood and enforceable condition.(iv) The lending institution shall ensure that the guaranteeclaim in respect of the credit facility and borrower is lodged with theTrust in the form and in the manner and within such time as may bespecified by the Trust in this behalf and that there shall not be anydelay on its part to notify the default in the borrowers account whichshall result in the Trust facing higher guarantee claims.

(v) The payment of guarantee claim by the Trust to thelending institution does not in any way take away the responsibility of

the lending institution to recover the entire outstanding amount ofthe credit from the borrower. The lending institution shall exercise allthe necessary precautions and maintain its recourse to the borrower

for entire amount of credit facility owed by it and initiate suchnecessary actions for recovery of the outstanding amount, includingsuch action as may be advised by the Trust.

(vi) The lending institution shall comply with such directions asmay be issued by the Trust, from time to time, for facilitating


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recoveries in the guaranteed account, or safeguarding its interest as aguarantor, as the Trust may deem fit and the lending institution shall

be bound to comply with such directions.(vii) The lending institution shall, in respect of any guaranteed

account, exercise the same diligence in recovering the dues, and

safeguarding the interest of the Trust in all the ways open to it as itmight have exercised in the normal course if no guarantee had beenfurnished by the Trust. The lending institution shall, in particular,refrain from any act of omission or commission, either before orsubsequent to invocation of guarantee, which may adversely affect theinterest of the Trust as the guarantor. In particular, the lendinginstitution should intimate the Trust while entering into anycompromise or arrangement, which may have effect of discharge orwaiver of personal guarantee(s) or security. The lending institutionshall also ensure either through a stipulation in an agreement with

the borrower or otherwise, that it shall not create any charge on the

security held in the account covered by the guarantee for the benefitof any account not covered by the guarantee, with itself or in favour ofany other creditor(s) without intimating the Trust. Further the lendinginstitution shall secure for the Trust or its appointed agency, through

a stipulation in an agreement with the borrower or otherwise, theright to list the defaulted borrowers' names and particulars on theWebsite of the Trust

CHAPTER III

GUARANTEE FEE

8. Guarantee Fee and Annual Service Fee

(i) One-time guarantee fee at specified rate ((a)currently1.00% in the case of credit facility upto Rs. 5 Lakh and 1.5% in thecase of credit facility above Rs. 5 Lakh (b) 0.75%, in case of creditfacilities upto Rs.50 lakh sanctioned to units in North Eastern Regionincluding State of Sikkim) of the credit facility sanctioned (comprising

term loan and / or working capital facility) shall be paid upfront to theTrust by the institution availing of the guarantee within 30 days from

the date of first disbursement of credit facility(not applicable forWorking capital) or 30 days from the date of Demand Advice(CGDAN) of guarantee fee whichever is later or such date asspecified by the Trust.(ii) The annual service fee at specified rate (currently 0.50% inthe case of credit facility upto Rs. 5 Lakh and 0.75% in the case ofcredit facility above Rs. 5 Lakh) on pro-rata basis for the first andlast year and in full for the intervening years onthe credit facility


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sanctioned (comprising term loan and / or working capital facility)shall be paid by the lending institution within 60 days ie. on or before

May 31, of every year. In the event of non-payment of annual servicefee by May 31 of that year or any other specified date, the guarantee

under the scheme shall not be available to the lending institution

unless the Trust agrees for continuance of guarantee and the lendinginstitution pays penal interest on the service fee due and unpaid, witheffect from the subsequent June 01, at four per cent over Bank Rate,per annum, or at such rates specified by the Trust from time to time,for the period of delay.

Provided further that in the event of non-payment ofannual service fee within the stipulated time or suchextended time that may be agreed to by the Trust on suchterms, liability of the Trust to guarantee such credit facility

would lapse in respect of those credit facility against which

the service charges are due and not paid,Provided further that, the Trust may consider renewal

of guarantee cover for such of the credit facility upon suchterms and conditions as the Trust may decide.

In the event of any error or discrepancy or shortfallbeing found in the computation of the amounts or in thecalculation of the guarantee fee / annual service fee, suchdeficiency / shortfall shall be paid by the eligible lendinginstitution to the Trust together with interest on such

amount at a rate of four per cent over and above the BankRate, or as may be prescribed by the Trust from time to

time. Any amount found to have been paid in excess wouldbe refunded by the Trust. In the event of anyrepresentation made by the lending institution in thisregard, the Trust shall take a decision based on theavailable information with it and the clarifications receivedfrom the lending institution, and its decision shall be finaland binding on the lending institution.

(iii) The amount equivalent to the guarantee fee and / or theservice fee payable by the eligible lending institution may be recovered

by it, at its discretion from the eligible borrower.The guarantee fee and / or annual service fee once paid by the lending

institution to the Trust is non-refundable. Guarantee fee / Annual Service Fee,shall not be refunded, except under certain circumstances like -

(i) Excess remittance,

(ii) Remittance made more than once against the same creditapplication,

(iii) Guarantee fee & / or annual service fee not due,(iv) Guarantee fee paid in advance but application not approvedfor guarantee cover under the scheme, etc.


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CHAPTER IVGUARANTEES

9. Extent of the guarantee

The Trust shall provide guarantee as under:

Category Maximum extent of Guarantee where creditfacility is

Upto Rs.5

lakh

Above Rs.5

lakh uptoRs.50 lakh

Above Rs.50 lakh

upto Rs.100 lakh

Micro Enterprises 85% of theamount in

default

subject to amaximum ofRs.4.25 lakh

75% /Rs.37.50

lakh

Rs.37.50 lakh plus50% of amount in

default above Rs.50

lakh subject tooverall ceiling ofRs.62.50 lakh

Womenentrepreneurs/ Unitslocated in North East

Region(incl. Sikkim)otherthan credit facilityupto Rs.5 lakh tomicro enterprises

80% of the amount in

default subject to amaximum of Rs.40 lakh

Rs.40 lakh plus 50%of amount in defaultabove Rs.50 lakh

subject to overallceiling of Rs.65 lakh

All other category ofborrowers

75% /Rs.37.50 lakh

Rs.37.50 lakh plus50% of amount in

default above Rs.50lakh subject to

overall ceiling ofRs.62.50 lakh

All proposals for sanction of guarantee approvals for credit facilities above Rs.50 lakh and upto Rs.100 lakh will have to be rated internally by the MLI and

should be of investment grade. Proposals approved by the MLIs on or after

December 8, 2008 will be eligible for the coverage upto Rs.100 lakh.

The guarantee cover will commence from the date of payment of guarantee feeand shall run through the agreed tenure of the term credit in respect of termcredit / composite credit. Where working capital alone is extended to theeligible borrower, the guarantee cover shall be for a period of 5 years or a blockof 5 years, or for such period as may be specified by the trust in this behalf.


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CHAPTER V

CLAIMS

10. Invocation of guarantee(i) The lending institution may invoke the guarantee in respect of

credit facilitywithin a maximum period of one year from date of

NPA, if NPA is after lock-in period or within one year of lock-inperiod, if NPA is within lock-in period, if the following conditionsare satisfied: -

a. The guarantee in respect of that credit facility was in force atthe time of account turning NPA.

b. The lock-in period of 18 months from either the date of lastdisbursement of the loan to the borrower or the date of paymentof the guarantee fee in respect of credit facility to the borrower,

whichever is later, has elapsed;c. The amount due and payable to the lending institution in

respect of the credit facility has not been paid and the dues havebeen classified by the lending institution as Non PerformingAssets. Provided that the lending institution shall not make or beentitled to make any claim on the Trust in respect of the saidcredit facility if the loss in respect of the said credit facility hadoccurred owing to actions / decisions taken contrary to or in

contravention of the guidelines issued by the Trustd. The credit facility has been recalled and the recovery

proceedings have been initiated under due process of law. Mere

issuance of recall notice under SARFAESI Act 2002 cannot beconstrued as initiation of legal proceedings for purpose of

preferment of claim under CGS. MLIs are advised to take furtheraction as contained in Section 13 (4) of the above Act wherein asecured creditor can take recourse to any one or more of therecovery measures out of the four measures indicated thereinbefore submitting claims for first installment of guaranteed

amount. In case the MLI is not in a position to take any of theaction indicated in Section 13(4) of the aforesaid Act, they mayinitiate fresh recovery proceeding under any other applicable lawand seek the claim for first installment from the Trust.

(rii) The claim should be preferred by the lending institution in

such manner and within such time as may be specified by the Trustin this behalf.

(iii) The Trust shall pay 75 per cent of the guaranteed amounton preferring of eligible claim by the lending institution, within 30days, subject to the claim being otherwise found in order and

complete in all respects. The Trust shall pay to the lending institution


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interest on the eligible claim amount at the prevailing Bank Rate forthe period of delay beyond 30 days. The balance 25 per cent of the

guaranteed amount will be paid on conclusion of recovery proceedingsby the lending institution. On a claim being paid, the Trust shall be

deemed to have been discharged from all its liabilities on account of

the guarantee in force in respect of the borrower concerned.(iv) In the event of default the lending institution shall exerciseits rights, if any, to takeover the assets of the borrowers and theamount realised, if any, from the sale of such assets or otherwiseshall first be credited in full by the lending institutions to the Trustbefore it claims the remaining 25 per cent of the guaranteed amount.(v) The lending institution shall be liable to refund the claimreleased by the Trust together with penal interest at the rate of 4%above the prevailing Bank Rate, if such a recall is made by the Trustin the event of serious deficiencies having existed in the matter of

appraisal / renewal / follow-up / conduct of the credit facility or

where lodgement of the claim was more than once or where thereexisted suppression of any material information on part of the lendinginstitutions for the settlement of claims. The lending institution shallpay such penal interest, when demanded by the Trust, from the date

of the initial release of the claim by the Trust to the date of refund ofthe claim.

The Guarantee Claim received directly from the branches or offices other thanrespective operating offices of MLIs will not be entertained.

11. Subrogation of rights and recoveries on account of claims paid(i) The lending institution shall furnish to the Trust, the

details of its efforts for recovery, realisations and such otherinformation as may be demanded or required from time to time. Thelending institution will hold lien on assets created out of the creditfacility extended to the borrower, on its own behalf and on behalf ofthe Trust. The Trust shall not exercise any subrogation rights andthat the responsibility of the recovery of dues including takeover ofassets, sale of assets, etc., shall rest with the lending institution;(ii) In the event of a borrower owing several distinct andseparate debts to the lending institution and making payments

towards any one or more of the same, whether the account towardswhich the payment is made is covered by the guarantee of the Trust

or not, such payments shall, for the purpose of this clause, be deemedto have been appropriated by the lending institution to the debtcovered by the guarantee and in respect of which a claim has been

preferred and paid, irrespective of the manner of appropriationindicated by such borrower or the manner in which such paymentsare actually appropriated.

(iii) Every amount recovered and due to be paid to the Trustshall be paid without delay, and if any amount due to the Trust


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remains unpaid beyond a period of 30 days from the date on which itwas first recovered, interest shall be payable to the Trust by the

lending institution at the rate which is 4% above Bank Rate for theperiod for which payment remains outstanding after the expiry of the

said period of 30 days.

CHAPTER VI

MISCELLANEOUS

12. Appropriation of amount received from the lending institutions

The amount received from the lending institutions shall be appropriated in theorder in which the service fee, penal interest and other charges have fallen

due. If the service fee and the penal interest have fallen due on the same date,

then the appropriation shall be made first towards service fee and then towardsthe penal interest and finally towards any other charges payable in respect ofthe eligible credit facility.

13. Appropriation of amount realised by the lending institution in respectof a credit facility after the guarantee has been invoked.

Where subsequent to the Trust having released a sum to the lending institutiontowards the amount in default in accordance with the provisions contained in

the Section 10 of this scheme, the lending institution recovers moneysubsequent to the recovery proceedings initiated by it, the same shall be

deposited by the lending institution with the Trust, after adjusting towards thecost incurred by it for recovery of the amount. The Trust shall appropriate thesame first towards the pending service fee, penal interest, and other chargesdue to the Trust, if any, in respect of the credit facility towards which theamount has been recovered by the lending institution, and the balance, if any,shall be appropriated in such a manner so that losses on account of deficit inrecovery of the credit facility between the Trust and the lending institution arein the proportion of 75% / 80% / 85% and 25% / 20% / 15% , respectively.

14. Trust's liability to be terminated in certain cases

(i)If the liabilities of a borrower to the lending institution on accountof any eligible credit facility guaranteed under this Scheme aretransferred or assigned to any other borrower and if the conditions as to

the eligibility of the borrower and the amount of the facility and anyother terms and conditions, if any, subject to which the credit facility canbe guaranteed under the Scheme are not satisfied after the said transferor assignment, the guarantee in respect of the credit facility shall be


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deemed to be terminated as from the date of the said transfer orassignment.

(ii)If a borrower becomes ineligible for being granted any creditfacilities under the Scheme, by reason of cessation of his activity or his

activity or his undertaking ceasing to come within the definition of a MSE

unit, the liability of the Trust in respect of any credit facilities granted tohim by a lending institution under the Scheme shall be limited to theliability of the borrower to the lending institution as on the date on whichthe borrower becomes so ineligible, subject, however, to the limits on theliability of the Trust fixed under this Scheme. However, notwithstandingthe death or retirement of a partner where the borrower is a partnershipfirm or the death of one of the joint borrowers, if the lending institution isentitled to continue the credit facilities to the surviving partner orpartners or the surviving borrower or borrowers, as the case may be andif the credit facilities have not already become non performing asset, the

guarantee in respect of such credit facilities shall not to be deemed to be

terminated as provided in this paragraph.

15. Returns and Inspections

(i)The lending institution shall submit such statements and furnishsuch information as the Trust may require in connection with any creditfacility under this Scheme.

(ii)The lending institution shall also furnish to the Trust all suchdocuments, receipts, certificates and other writings as the latter may

require and shall be deemed to have affirmed that the contents of suchdocuments, receipts, certificates and other writings are true, provided

that no claim shall be rejected and no liability shall attach to the lendinginstitution or any officer thereof for anything done in good faith.

(iii)The Trust shall, insofar as it may be necessary for the purposes ofthe Scheme, have the right to inspect or call for copies of the books ofaccount and other records (including any book of instructions or manualor circulars covering general instructions regarding conduct of advances)of the lending institution, and of any borrower from the lendinginstitution. Such inspection may be carried out either through theofficers of the Trust or of SIDBI (except in case of Institutions other than

SIDBI) or any other person appointed by the Trust for the purpose ofinspection. Every officer or other employee of the lending institution or

the borrower, who is in a position to do so, shall make available to theofficers of the Trust or SIDBI or the person appointed for the inspectionas the case may be, the books of account and other records and

information which are in his possession.

16. Conditions imposed under the Scheme to be binding on the lendinginstitution


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(i)Any guarantee given by the Trust shall be governed by theprovisions of the Scheme as if the same had been written in the

documents evidencing such guarantee.(ii)The lending institution shall as far as possible ensure that the

conditions of any contract relating to an account guaranteed under the

Scheme are not in conflict with the provisions of the Scheme butnotwithstanding any provision in any other document or contract, thelending institution shall in relation to the Trust be bound by theconditions imposed under the Scheme.

17. Modifications and exemptions

(i)The Trust reserves to itself the right to modify, cancel or replacethe scheme so, however, that the rights or obligations arising out of, oraccruing under a guarantee issued under the Scheme up to the date on

which such modification, cancellation or replacement comes into effect,

shall not be affected.(ii)Notwithstanding anything herein contained, the Trust shall have a

right to alter the terms and conditions of the Scheme in regard to anaccount in respect of which guarantee has not been invoked as on the

date of such alteration.(iii)In the event of the Scheme being cancelled, no claim shall lie against

the Trust in respect of facilities covered by the Scheme, unless theprovisions contained in Clause (i) and (ii) of Section 10 of the Scheme arecomplied with by the lending institution prior to the date on which the

cancellation comes into force.

18. Interpretation

If any question arises in regard to the interpretation of any of the provisions ofthe Scheme or of any directions or instructions or clarifications given inconnection therewith, the decision of the Trust shall be final.

19. Supplementary and general provisions

In respect of any matter not specifically provided for in this Scheme, the Trust

may make such supplementary or additional provisions or issue suchinstructions or clarifications as may be necessary for the purpose of the

Scheme.

Documents

Bank of INdia Schemes