Products & Services

Karnataka State Financial Corporation

(Upto 31st July 2009)

KARNATAKA STATE FINANCIAL CORPORATION

Kaushik Mukherjee, IASManaging Director

Dear Entrepreneur:

KSFC has been playing a pivotal role in the development of Micro, Smalland Medium scale Enterprises (MSMEs) in the State of Karnataka forthe last 50 years of its existence. Since inception, KSFC has assisted morethan 1.60 lakh units with cumulative sanction of more than Rs.9,102 croreout of which about 50% is towards SMEs.

Amendments to SFCs Act provide wide-ranging scope in financialassistance and operational flexibility. Keeping this in view, KSFC hasre-engineered itself to ensure utmost customer satisfaction with newenergy, thrust and speed. In line with this, the Corporation has put inplace comprehensive, client-friendly, need-based policies in the areas ofcredits and recoveries.

Apart from setting standards of performance, these policies would alsoachieve the objective of transparent governance.

Keeping the above in mind, we have brought out this fairly exhaustivebrochure for your benefit. The brochure gives details of functions ofKSFC, financial services available, various schemes in operation andprocedures for availing the financial assistance.

Based on the feed back from our existing loanees, a chapter has beenadded about the frequently asked questions (FAQs). I am sure you willfind this book very useful and informative.

With regards,

Yours sincerely,

Bangalore (Kaushik Mukherjee)

CONTENTS PAGE NO

Introduction 1

Financial Services 2

Area of Operation 5

Purpose and limit of assistance 6

Lending Policy - Norms and Parameters 8

Industrial Policy of GOK (2009-2014) 11

Credit Linked Capital Subsidy Scheme (CLCSS) 17

Technology upgradation for textile industries 19

Interest Subsidy Scheme for 22Scheduled Caste and Tribe Entrepreneurs

Privileged Entrepreneurs' Scheme 24

Assistance to Construction Activity (Term Loans) 26

Assistance to Construction Activity (Corporate Loan) 29

General Corporate Loan Scheme 31

Assistance for Construction of Roads 33

Single Window Scheme 34

Working Capital Term Loan - For existing units 36

Line of Credit for purhcase of Raw Materials 38

Assistance for Marketing Related Activities 40

Acquisition of Existing Assets & Enterprises 41

Assistance to Entertainment Industry 43

Assistance to Tourism Related Activities 46

Assistance to Health Care Services 48

Scheme for Small Road Transport Operators 50

Acquisition of ISO 9000 Series Certification 51

Scheme of Financial Assistance toFood Processing Industries 52

Rental Discounting Scheme 53

Scheme for Financing Energy Saving Projects 56

General Scheme 58

Scheme for Micro Finance Activity 60

Hire Purchase & Financial Services 62

Hire Purchase 63

Non-Convertible Debentures 65

Factoring 67

Foreign Letter of Credit 70

Other Financial Services 71

Procedures 75

Frequently Asked Questions (FAQs) 78

Annexure-I Interest Rate Structure 82

Annexure-II Project Profile 86

Annexure-III Bio-data and Networth 94

Zonal Offices 98

Super 'A' Grade Branch Office 99

'A' Grade Branch Offices 100

'B' Grade Branch Offices 102

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INTRODUCTION

Karnataka State Financial Corporation is a State level financialinstitution established by the State Government in the year 1959under the State Financial Corporations Act 1951 to meet mainlythe long term financial needs of Micro, Small and MediumEnterprises (MSMEs) in the State of Karnataka.

Today, while the State economy is making rapid strides in theglobal market, KSFC is moving in tandem. As a pioneering andresponsive financial institution, KSFC is fine-tuned to fulfill theplans and aspirations of entrepreneurs by extending all possibleassistance.

Amendments to the SFCs' Act provide for extending wideranging scope of assistance and operational flexibility. Keepingthis in view, KSFC has re-engineered itself to ensure utmostcustomer satisfaction with new energy, thrust and speed.

In the 50 years of its existence, KSFC has contributed mostsignificantly for the growth of SMEs, backward area developmentand promotion of first generation entrepreneurs. Its achievementin these areas is unparalleled.

Since inception, KSFC has assisted more than 1.60 lakh units withcumulative sanction of more than Rs.9,102 crore out of whichabout than 50% is towards SMEs.

KSFC an ISO 9001:2000 certified organisation is proud to haveplayed a major role in the industrial development of the State.It is also the proud privilege of KSFC to have assisted manyindustries that are internationally recognised like INFOSYS &BIOCON.

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FINANCIAL SERVICES

ELIGIBLE ACTIVITIES FOR FINANCIAL SERVICES

KSFC is a financial super market. It extends all types of financialassistance in the form of long-term loans, short-term loans(in the form of working capital term loans and corporate loans)and other financial services. KSFC’s assistance covers almost alltypes of industrial and service sectors.

The SFCs' Act prescribes broadly the types of activities,which are eligible for financial assistance from the Corporation.The Act also provides for SIDBI to include newer areas ofactivities for financial assistance from time to time. This apart,the Corporation has also evolved its own schemes underbroad guidelines of SFCs' Act depending upon market potential.The activities which are eligible for financial assistancefrom the Corporation are grouped into following three broadcategories:

1. Activities as listed out in the SFCs' Act;

2. Activities specifically permitted by SIDBI;

3. Activities formulated by the Corporation.

As listed out in the SFCs' Act:

The State Financial Corporations (Amendment) Act, 2000,provides the list of activities which can be covered under the listof industrial concern engaged or to be engaged in:

i. Manufacture, preservation or processing of goods;

ii. Mining or development of mines;

iii. Hotel industry;

iv. Transport of passenger or goods by road or by water or byair (or by rope-way or by lift),

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v. Generation or distribution of electricity or any other formof power;

vi. Maintenance, repair, testing or servicing of machinery ofany description or vehicles or motor boats or trailers ortractors or vessels.

vii. Assembling, repairing or packing any article with the aidof machinery or power,

viii. Setting up or development of an industrial area orindustrial estate;

ix. Fishing or providing shore facilities for fishing ormaintenance thereof;

x. Providing weigh bridge facilities;

xi. Providing engineering, technical, financial management,marketing of other services or facilities for industry;

xii. Providing medical, health care or other allied services.

xiii. Providing software or hardware services relating toinformation technology, telecommunications or electronicsincluding satellite linkage and audio or visual cablecommunication.

xiv. Setting up or development of tourism related facilitiesincluding amusement parks, convention centers,restaurants, travel and transport (including thoseat airports), tourist service agencies and guidance andcounseling services to the tourists;

xv. Construction;

xvi. Development, construction and maintenance of roads;

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xvii. Providing commercial complex facilities and communitycenters including conference halls;

xviii. Floriculture;

xix. Tissue culture, fish culture, poultry farming, breeding andhatcheries;

xx. Service industry, such as altering, ornamenting,polishing, finishing, oiling, washing, cleaning orotherwise treating or adapting any article or substancewith a view to its use sale transport, delivery or disposal;

xxi. Research and development of any concept technology,design, process or product whether in relation to any of thematter aforesaid, including any activities approved by theSmall Industries Bank; or

xxii. Such other activity as may be approved by the SIDBI;

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AREA OF OPERATION

Activities permitted by SIDBI:

i. Construction / buying of ready-built showrooms and salesout-lets (only fixed assets are eligible for financing, itemskept for sale are not eligible for financing);

ii. Construction / buying of ready-built area for establishingdepartmental stores and shopping malls (only fixed assetsare eligible for financing, items kept for sale are not eligiblefor financing);

iii. Setting up of Medical Stores (only fixed assets are eligiblefor financing, items kept for sale are not eligible forfinancing);

iv. Setting up of vocational training centers for impartingtechnical knowledge to entrepreneurs for setting up andrunning units efficiently and to produce quality goods;

v. Setting up entertainment industry including production offilms.

The area of operation covers the entire State of Karnataka. KSFChas Branches in all the district head quarters. The industrialunits / service sectors established or to be established withinthe State are only eligible for assistance. The Branch Offices ofthe Corporation are adequately delegated with powers of sanctionand disbursement. Generally, requirements of financial assistanceupto Rs.100.00 lakhs are handled by the concerned Branch Officeitself. If the requirement of loan is more than Rs.100.00 lakhs,the entrepreneurs will have to approach Head Office.

Based on the activities permitted under the SFCs’ Act, theCorporation has formulated various schemes for extendingfinancial assistance. Brief particulars of various schemes are givenunder the schemes of the Corporation.

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PURPOSE AND LIMIT OF ASSISTANCE

Being a term lending agency, Corporation extends financialassistance normally for creation of fixed assets in the form ofland, building, plant & machinery and miscellaneous assetsrequired for the project.

However, the Corporation also extends short or medium termloans in the form of working capital term loan and corporate loanto meet the urgent working capital requirements of the new andexisting units. The Corporation extends financial assistance forcreation of fixed assets as also working capital for currentassets under single window type of assistance in deserving cases.KSFC extends financial assistance for establishing new units aswell as for expansion / diversification / modernisation of theexisting units.

Limit of Accommodation:

The following is the maximum limit of loan that could be availedby the entrepreneurs:

Category Maximum Loan

i. Proprietary / Partnership Rs.200.00 lakhs

ii. Corporate bodies Rs.500.00 lakhs(both private / public Ltd),and registered co-operative societies

• In respect of new units / existing units operating successfully,maximum limit can be extended upto Rs.800.00 lakhs forcategory – (i) and Rs.2000.00 lakhs for category – (ii).

• In respect of category (ii) the financial assistance can begranted provided paid up capital and free reserves do notexceed Rs.30.00 crore.

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• If the requirements of funds for the project is substantial andcannot be extended by the Corporation alone, then therequirement of loan for such projects can be met in consortiumwith other Financial Institutions.

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LENDING POLICY – NORMS AND PARAMETERS

Lending Policy Of The Corporation:

The Corporation formulates lending policy at the beginningof each financial year. The loans are given based on the lendingpolicy of the Corporation. The lending policy covers variousaspects like the group exposure, thrust sectors, sectors in thenegative list, promoters’ contribution, security margin,collateral security norms etc. The industrial policies of theState and Central Government are also taken into accountwhile formulating the lending policy of the Corporation.

Policy On Minimum Loan Size:

The policy on the minimum loan size of Rs.5.00 lakhs isapplicable for all activities except medical and veterinary doctorswhere minimum limit is Rs.2.00 lakhs.

The minimum size of the loan for others is reduced toRs.2.00 lakhs in case of existing units going in for expansion /modernisation.

Promoters' Contribution: The minimum promoter ’scontribution as the percentage of the total project costprescribed in various schemes varies between 22.5% and33.3% depending on the location of the project, variousschemes of SIDBI operated by the Corporation, class ofentrepreneur etc.,

Debt Equity Ratio (DER): The Corporation adopts the norms forDebt Equity Ratio as per the guidelines issued by the SmallIndustries Development Bank of India from time to time.

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The present norms are :

Scheme D.E.R *

RSR Scheme Flexible

Modernisation Scheme Projects : 4:1

Overall : 2:1

Others:

Upto Rs.10.00 lakhs 3:1

Above Rs.10.00 lakhs 2:1

Additional Loans Projects : 2:1

(within overall limit) Overall : 2:1

Residential Apartment Projects 1:1

* Central / State subsidy if any available for the implementation

of the project will be treated as equity for the purpose of

DER calculation.

Debt Service Coverage Ratio (DSCR) : The repayment period

of loan is fixed by the Corporation with due regard to the cash

generation & profitability of the project. For this purpose,

average DSCR ranging between 1.5:1 and 2:1 has been accepted

as reasonable. In projects involving mainly land / building such

as commercial complexes, software technology parks, industrial

estates, hotels etc., with assured income, the DSCR can be relaxed

up to 1.25 : 1.00. The DSCR indicates the ability of the project to

service the debts during the currency of the loan.

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Repayment Period: The repayment period of the term loanvaries between 3 to 8 years including moratorium period ofmaximum 2 years depending on the period of implementation.In respect of corporate loan, the maximum repayment period is36 months including six months moratorium.

Security : In addition to the primary security i.e., assets financedby the Corporation, collateral security as per the lending policyof the Corporation is insisted. The collateral security requirementdepends upon the type of project, location, sector, quality ofprimary assets etc.,

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INDUSTRIAL POLICY OF G O K (2009 – 2014)

Government of Karnataka has formulated industrial policy forthe period 2009-14. For details, the entrepreneurs are advised torefer the booklet on New Industrial Policy brought out by theDepartment of Industries and Commerce, Government ofKarnataka.

For the purpose of administering graded scale of incentivesand concessions the taluks are classified into 4 zones dependingon the backwardness of taluks and broad guidelines ofDr.D.M.Nanjundappa committee report.

Zone 1 : 39 taluks – Most Backward Taluks.Zone 2 : 40 taluks – More Backward Taluks.Zone 3 : 85 taluks – Backward Taluks.Zone 4 : 12 taluks- Industrially Developed Taluks.

1. Investment Promotion Subsidy:

a) Micro Mfg Enterprises:

Zone-1 : 25% VFA* (max.Rs.10.00 lakhs)Zone-2 : 20% VFA (max.Rs.7.5 lakhs)Zone-3 : 15% VFA (max.Rs.5.00 lakhs)Zone-4 : NIL

b) Small Mfg Enterprises;

Zone-1 : 20% VFA (max.Rs.20 lakhs)Zone-2 : 15% VFA (max.Rs.15 lakhs)Zone-3 : 10% VFA (max.Rs.10 lakhs)Zone-4 : NIL

c) Medium Mfg Enterprises (minimum 25 workers):

Zone-1 : Rs.30.00 lakhsZone-2 : Rs.20.00 lakhsZone-3 : NilZone-4 : Nil

* VFA - Value of Fixed Assets

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Notes:

i. 25% of the subsidy sanctioned amount will be releasedevery year on refund basis towards the payments madeby the unit in respect of gross VAT, ESI and PF andpower tariff.

In cases of enterprises which do not use power and notcovered under VAT, EPF, ESI the investment subsidywill be released against the loan dues.

ii. This incentive is available to enterprises availingterm loan to an extent of minimum 50% cost of the fixedassets only.

iii. The unit shall avail sanctioned subsidy within the period offive years.

Additional subsidy to SC/ST, Women, Physical challenged,Ex-servicemen Entrepreneurs and enterprises coming up in mostBackward taluks of Hyderabad Karnataka region.

Additional 5% subsidy subject to a maximum of Rs.1.00 lakhs,Rs.3.00 lakhs and Rs.5.00 lakhs for Micro, Small and MediumManufacturing Enterprises respectively.

2. Exemption from Stamp Duty:

MSME, Large and Mega Projects:

Stamp duty has to be paid in respect of (i) loan agreements,credit deeds, mortgage and hypothecation deeds executed foravailing term loans from State Govt and / or State FinancialCorporation, Industrial Investment Development Corporation,

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National Level Financial Institutions, Commercial Banks,RRBs and other institutions which may be notified by theGovt from time to time for the initial period of five years onlyand (ii) for lease deeds, lease- cum-sale and absolute saledeeds executed by industrial Enterprises in respect ofindustrial plots, sheds, industrial tenements, by KIADB,KSSIDC, KEONICS, KSIIDC, Industrial Co-operatives andapproved private industrial estates shall be exempted as below;

Zone 1 : 100%Zone 2 : 100%Zone 3 : 75%Zone 4 : Nil

Concessional Registration Charges

MSME, Large and Mega Projects :

For all loan documents and sale deeds as specified in 2 above,the registration charges shall be at a concessional rate ofRs.1 per 1,000.

3. Incentives for Export Oriented Enterprises;

MSME, Large and Mega Projects

(a) Exemption from payment of ET

For 100% EOUs, 100% exemption from payment of ET on‘Plant & Machinery and Capital goods’ for an initial period of3 years from the date of commencement of projectimplementation irrespective of zones.

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For other EOUs, (Minimum Export obligation of 25% of theirtotal turnover) 100% exemption from payment of ET on rawmaterials, inputs, component parts & consumables (excluding

petroleum products) for an initial period of 3 years from the dateof commencement of commercial production in Zone 1,2, and 3and 50% in Zone 4.

(b) Refund of Certification Charges:

Refund of expenses incurred for compulsory marking likeConformity Europeenne (CE), China Compulsory Certificate

(CCC), etc., to the extent of 50% of expenses subject to amaximum of Rs.2.00 lakhs per unit for both 100% and otherEOUs in all zones.

Definitions of MSMEs (Micro, Small & Medium Enterprises)

1. The enterprises engaged in the manufacture or production of

goods pertaining to any industry:

a. Micro Enterprises: Enterprises in which the investment in plantand machinery is less than Rs. 25.00 lakhs irrespective of the

location of the unit.

b. Small Enterprises: Enterprises in which the investment inplant and machinery is more than Rs.25.00 lakhs but does not

exceed Rs. 500.00 lakhs.

c. Medium Enterprises: Enterprises where investment in plantand machinery is more than Rs.500.00 lakhs but does not exceed

Rs.1000.00 lakhs.

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2. The enterprises engaged in providing or rendering ofservices:

a. Micro Enterprises: Engaged in providing services where theinvestment in equipment is upto Rs.10.00 lakhs.

b. Small Enterprises: Engaged in providing services where theinvestment in equipment is more than Rs.10.00 lakhs but doesnot exceed Rs.200.00 lakhs.

c. Medium Enterprises: Engaged in providing services where theinvestment in equipment is more than Rs.200.00 lakhs but doesnot exceed Rs.500.00 lakhs.

Large Scale Industry: An industrial unit which is not classifiedas Micro, Small and Medium Enterprise and with investmentsupto Rs.250.00 crore shall be classified as Large Scale Industry.

Mega Project Means: Projects with an investment ofRs. 250.00 crore and above.

100% Export Oriented Units (EOUs): A 100% Export OrientedUnit is one which undertakes to export its entire productionof goods subject to relaxation as permitted by GOI from time totime and as defined by it. Such enterprises may be set up eitherunder the Export Oriented Units or under EPIP (Export PromotionIndustrial Park) Scheme or under EHTP (Electronic HardwareTechnology Park) Scheme or Software Technology Park Schemeor Special Economic Zone.

Fixed Assets: Fixed Assets shall mean the total investment madeon land, building and plant & machinery and such otherproductive assets like tools, jigs and fixtures, dies, utilities likeboilers, compressors, diesel generating sets, cranes, materialhandling equipments and such other equipments directly relatedto production purposes.

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SCHEMES OF THE CORPORATION

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Objective : The objective of the scheme is to facilitatetechnology upgradation of Micro and SmallEnterprises (MSEs) in specified products /sub-sectors by providing 15% capital subsidyfor induction of proven technologiesapproved under the scheme.

The list of products / sub-sectors covered underthe scheme is as per the approval of theGoverning and Technology Approval Board(GTAB) constituted under this scheme.

Eligible : Sole proprietary concerns, partnerships,Borrowers co-operative societies, private and public

limited companies.

Eligibility : • Existing MSEs registered with the StateCriteria Directorate of Industries who upgrade with

the state of art technology, with or withoutexpansion are eligible.

• New MSEs which are registered with theState Directorate of Industries and who setup proposed facility with the appropriateeligible and proven technology dulyapproved by GTAB are also eligible.

• Capital subsidy under the scheme shall beavailable for projects where term loans havebeen sanctioned by the eligible PLIs on orafter 29th September 2005.

• Industry graduating from small scale tomedium scale on account of sanction ofadditional loan under CLCSS shall be eligiblefor assistance.

CREDIT LINKED CAPITAL SUBSIDY SCHEME (CLCSS)

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Others : Promoters’ contribution, debt equity ratio etc.,will be determined by the lending agencyas per the existing norms. Units availingsubsidy under the CLCSS shall not avail anyother subsidy for technology upgradationfrom the Central / State / UT Govt. However,cases covered under National Equity Fund(NEF) scheme, which are otherwise eligibleunder CLCSS can also be covered under thisscheme. For further details on scheme and alsoregarding activities covered the entrepreneursare advised to refer CLCS scheme ofGovernment of India.

Note :

This revised scheme is effective fromSeptember 29, 2005. The scheme is launched byGovernment of India, Ministry of SSI & ARI.(Prior to 2005 then existing parameters &guidelines will apply).

The Scheme will be in operation upto31st March 2012.

SIDBI is designated as nodal agency forchannelising assistance under the scheme.

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Objective : To provide encouragement to textile industrialunits (including units in the cotton ginningand pressing sectors) in taking up technologyupgradation and to modernise their productionfacilities.

Eligible : Sole proprietary concerns, partnerships,Borrowers co-operative societies, private and public

limited companies in textile and cotton ginningand pressing industries.

Eligibility : • Installation of specified types of machineryCriteria and for eligible activities in a new unit or in

an existing unit by way of replacement ofexisting machinery and / or expansion.

• New units must set up their facilities onlywith the appropriate eligible technology.

Promoters’ : Minimum 20% of the project cost.Contribution

Terms of : • Rate of interest: The prevailing rate ofAssistance interest as applicable to SSI is charged.

Refer interest rate table at Annexure-I

• Reimbursement of 5 percentage points ofinterest charged by the lending agencyon the project of technology upgradationwill be made available. However, forspinning machinery reimbursement will be4 percentage points.

TECHNOLOGY UPGRADATION FOR TEXTILE INDUSTRIES

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• Repayment period: upto 5 years includinga moratorium of upto 12 months.

• Security: 100% of portion of term loanearmarked for acquisition of intangible assetssuch as Technical knowhow, designs,drawings etc.

50% on loan earmarked towards proposedmachinery for the first time borrowers and30% on existing units having good trackrecord.

• Programme Period : The scheme is with effectfrom 01.01.2007 upto 31.03.2012. In respectof prior case the then existing parameters &guidelines will apply

Others : • The scheme will provide an additional optionto the powerlooms units to avail of20% Margin Money subsidy under TUFS inlieu of 5% interest reimbursement oninvestment in TUF compatible specifiedmachinery subject to a capital ceiling ofRs.200 lakhs and ceiling on margin moneysubsidy Rs.20 lakhs. A minimum of 15%equity contribution from beneficiaries will beensured.

• The scheme will provide 15% Margin Moneysubsidy for SSI textile and jute sectorin lieu of 5% interest reimbursement oninvestment in TUF compatible specifiedmachinery subject to a capital ceiling ofRs.200 lakhs and ceiling on margin

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money subsidy Rs.15 lakhs. A minimum of15% equity contribution from beneficiarieswill be ensured.

• The scheme will provide 5% interestreimbursement plus 10% capital subsidy forspecified machinery required in manufactureof technical textiles and garmentingmachineries. (however, the units which havetaken the sanction prior to 31.03.2007 but notstarted the commercial production, to becertified by Chartered Engineer andChartered accountant, will be covered underthe modified Scheme.)

• Certain imported second hand machineryhave been permitted. The entire range ofimported second hand machinery will nowbe ineligible under the scheme for any benefitexcept automatic shuttleless looms with thevalue cap of Rs.8.00 lakhs per machine and10 years’ vintage and with a residual life ofminimum 10 years.

• Investments like land, factory building,pre-operative expenses and margin moneyfor working capital will now be ineligiblefor benefit of reimbursement under thescheme except meant for apparel sectorand handloom with existing 50% cap. In caseapparel unit is engaged in other activity,the eligible investment under this head willonly be related to plant & machinery eligiblefor manufacturing of apparel.

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Objective : Interest subsidy in respect of loans availed bySC/ST entrepreneurs.

Eligible : • The Scheme is applicable only to the loanborrowers availed by the scheduled caste / tribe

entrepreneurs.

• The promoters should be a first generationentrepreneurs.

• The interest subsidy under the scheme shallnot be in addition to other interest subsidyschemes of GOK. If an entrepreneur hasclaimed interest subsidy under any otherscheme of GOK, he will not be eligible toclaim interest subsidy under this scheme.

• Units in the service sectors are also eligibleto claim interest subsidy under the scheme.

• To be eligible for interest incentives underthe scheme, the unit should not be in defaultin payment to the financial institutions.

• The units will be eligible for interest subsidyfor a period of five years from the date offirst disbursement of the loan by KSFC.

• The minimum loan size of Rs.5.00 lakhs forall activities except existing units going forupgradation / modernisation, medical andveterinary doctors minimum limit isRs.2.00 lakhs.

INTEREST SUBSIDY SCHEME FOR SCHEDULED CASTE / TRIBE ENTREPRENEURS

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• KSFC will sanction loans under this schemewith normal interest rates. The differencebetween the lending rate of KSFC andeffective rate of 4% p.a to the borrowers willbe met by Government of Karnataka.

Security : A relaxation of 25% in the requirement ofminimum collateral security upto a loan amountof Rs. 25.00 lakhs, be considered in the case ofentrepreneurs belonging to Scheduled Caste/Tribe. However, for loans more thanRs. 25.00 lakhs, the collateral securityrequirement shall be as applicable to generalcategory.

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Objective : To meet short term funds requirements of theexisting units which are under thrust / normalsectors of lending policy of the Corporation.

Eligible : Proprietary concern, partnership firm, privateBorrowers and public limited companies.

Eligible : a) The units have availed loan of Rs.10 lakhsCriteria and more from KSFC in the past and should

have a good track record for at least 3 years.

b) The account should have been in standardcategory during the last three years.

c) In respect of rescheduled cases and casescovered under DRS-RSR, the loan can beextended, if the account is regular andcontinues to be in standard category for thelast three years.

d) The unit should be working on profitablelines i.e. the units should have earned netprofits at least during the last three years asevidence by the audited financial statements.

Extent of : Minimum Rs.5.00 lakhs and MaximumFinance Rs.100.00 lakhs

Terms of : Rate of Interest : Refer interest rate table atAssistance: Annexure I.

Repayment Period : The loan shall be repaidwithin 24 months with moratorium period ofthree months.

PRIVILEGED ENTREPRENEURS' SCHEME

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Security : The loans shall be secured by 100%collateral security. The security shall be by wayof urban immovable properties or the surplusvalue of the existing immovable fixed assets ofthe units at SR value. No relaxation in collateralsecurity requirements.

LAFD/ : Following is the fee structure prevailing atProcessing Fee present:

Loans availed under the scheme for thefirst time:

a. LAFD : 0.25% + Service Tax

b. Upfront Fee : 0.25% + Service Tax

In respect of repeat borrowers under the scheme:

a. LAFD : 0.25% + Service Tax

b. Upfront Fee : 0.25% + Service Tax

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Objective : To provide assistance to the constructionactivity sector. The following are coveredunder the scheme:

• Construction of commercial complex;

• Construction of godowns and warehouses;

• Construction / buying of ready built showrooms and sales outlets;

• Construction of residential apartments /group housing;

• Creation of infrastructure for professionaleducational institutions;

• Construction of industrial estates;

• Establishment of software parks;

• Formation of residential layouts;

Eligible : Individuals, firms, companies and otherBorrowers eligible constitutions.

Purpose of : • The assistance under this scheme isassistance provided for construction of building.

• Interior decorating, air conditioning.

• Providing lift and communication facility.

• Any other facility connected with theconstruction activity.

• Formation of residential layouts.

The building so constructed can be either leased(except group housing and residentialapartments) or sold on outright basis with theprior approval of the Corporation.

ASSISTANCE TO CONSTRUCTION ACTIVITY (TERM LOANS)

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Land : The land shall be owned or leased for aminimum period of 30 years. The lease periodmay be relaxed but not less than 20 years withthe prior approval of the Corporation. Whenthe freehold rights of land are assigned to theCorporation the lease period can be 10 yearsand lease need not be registered.

• In respect of commercial complexes the landhas to be located at taluk head quarters /town municipality, district head quartersand city.

• In respect of residential apartment / grouphousing, the land should be located inBangalore, Mysore, Mangalore, Udupi,Belgaum, Hubli-Dharwad, Davanagere,Gulbarga, Haveri, Bagalkot, Bijapur andBellary cities.

• In respect of assistance to show rooms andsales outlets, items / activities displayed orkept for sales in show rooms, sales outlets,departmental stores, shopping malls etc.,are not eligible for financing.

Extent of : • Minimum of Rs.10.00 lakhs and maximumLoan as per the prevailing norms applicable.

• Any relaxation in minimum limit may beconsidered only with the prior approval ofthe Competent Authority.

Promoter’s : Minimum promoter’s contribution shall becontribution 25% of project cost.

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Terms of : Rate of interest : Refer interest rate table atAssistance Annexure-I.

Security :

• First charge on the land, building and otherassets to be created out of the loan.

• Collateral security as may be deemednecessary and as per existing guidelines.

Repayment period : From 3 to 8 years includingmoratorium of 2 years, depending on thenature of projects.

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Objective : To provide financial assistance to propertydevelopers, construction companies and firmsfor construction of group housing, commercialcomplexes, software parks and infrastructureprojects like roads, flyovers, bridges etc.

Eligible : Individuals (contractors), firms and companiesborrowers and who have been in operation for atleast 5 yearsother terms and have proven profit record for at least

previous 3 years and :

• should not be in default with commercialbanks / financial institutions;

• the networth comprising of equity andreserves and surplus should not exceedRs.20.00 crore;

• the project cost should not exceedRs.20.00 crore.

Extent of : Upto Rs.200.00 lakhs in case of proprietaryfinance and partnership concerns and Rs.500.00 lakhs

in case of Private and Public LimitedCompanies. However, the loan amountshall not exceed 20% of the average salesrecorded in the previous 3 years

OR / AND

shall not exceed 20% of the estimatedinvestments in the projects / orders on hand.

Terms of : Rate of interest : Refer interest rate table atAssistance Annexure-I

ASSISTANCE TO CONSTRUCTION ACTIVITY (CORPORATE LOAN)

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Repayment period : Upto 5 years including amoratorium of 6 – 18 months depending uponthe nature of the project.

Security : 150% of the loan amount in the formof immovable assets / FD / LIC / NSC etc.Third party collateral not acceptable. Escrowmechanism required.

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Objective : The objective of the scheme is to extendshort term loans to the existing successfulunits who require urgent working capitalfunds either to meet the gap in the workingcapital requirements or funds required forexecuting the rush of orders. This loan is alsoconsidered for developing / expandingnew markets and opening LC for purchase ofnew equipments till a term loan is sanctionedand released by the financial institutions.The Corporation also extends corporate loanfor meeting the statutory dues to theGovernment like payment of Income Tax,Sales Tax, Excise Duty etc.,

Eligibility : Existing units eligible for financial assistance Criteria from KSFC under the SFCs' Act, 1951 are eligible

to be covered under the scheme.

Limit of : Minimum of Rs. 5.00 lakhs and maximum ofAssistance Rs. 200.00 lakhs in case of proprietary and

partnership firms and Rs. 500.00 lakhs inrespect of corporate bodies, public &private limited companies and registeredco-operative societies.

Promoters’ : Minimum of 25% of the project cost.Contribution

Terms of : Interest : Refer interest rate table atAssistance : Annexure-I.

Repayment period : Not exceeding24 months including moratorium periodof 6 months (maximum).

GENERAL CORPORATE LOAN SCHEME

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Security : Assets free of encumbrance chargedto the Corporation will be further charged. Inthe absence of adequate security in the form ofprimary assets as required under the scheme,collateral security to the extent of 100% of theloan amount is insisted in respect of assistedunits of the Corporation and in respect ofnon assisted units the collateral securityrequirement is 150% of the loan amount,and for AAA rated entrepreneurs it is 75%.

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ASSISTANCE FOR CONSTRUCTION OF ROADS

Purpose : For acquiring capital goods, equipmentincluding road rollers, asphalting units,concrete mixtures, tippers, excavators,surveying and other supporting equipmenttowards development, maintenance andconstruction of roads.

Eligible : Any reputed civil contractors / firms /Borrowers companies.

Terms of : Rate of Interest: Refer interest table atassistance : Annexure-I.

Repayment period: Upto 6½ years excludingmoratorium period varying between6 to 9 months.

Security: 100% on all loans.

Promoter contribution : 25% of project cost.

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Objective : The objective of the scheme is to providetimely and adequate working capitalassistance to micro, small and mediumenterprises (MSME) along with term loan forfixed assets for entrepreneurs setting up newprojects by KSFC.

Eligibility : All new MSMEs to be engaged in themanufacture or production, processing orpreservation of goods i.e., manufacturingenterprises where the total venture outlay(including working capital requirements) doesnot exceed Rs.100.00 lakhs.

Limit of : Minimum assistance: Rs.2.00 lakhs per unit.assistance Maximum assistance: Rs.30.00 lakhs per unit.

Promoters : Minimum: 25% of the venture outlay incontribution respect of loans upto Rs.10.00 lakhs

(TL+WCTL).

Maximum: 33% of the total venture outlay inrespect of loans above Rs.10.00 lakhs(TL+WCTL).

Terms of : Repayment period :Assistance Term Loan: 5 to 8 years (including moratorium).

Working Capital TL: Not exceeding 5 years

Security :Term Loan: As applicable under prevalentlending policy.

SINGLE WINDOW SCHEME

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Working Capital TL :

• Charge on the current assets being financed.

• Minimum 100% collateral security as per theprevalent lending policy.

• Irrevocable & unconditional personalguarantees of the promoter directors/corporate guarantee to be obtained whereverapplicable.

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Objective : The objective of the scheme is to providetimely and adequate working capitalassistance to the existing micro, small andmedium enterprises (MSME) who haveavailed term loans earlier from the Corporation,having proven track record.

Eligibility : • Existing MSMEs engaged in the manufactureor production, processing or preservation ofgoods i.e., manufacturing enterprises,who have availed term loans earlierfrom the Corporation, having proventrack record. The existing units whichhave availed the WCTL under the SWSearlier from the Corporation are alsoeligible for additional WCTL. Availing a termloan is not a pre-condition for grantingeligible WCTL under the scheme.

• The unit should be in existence with aminimum period of operation of three years.The unit should be working profitably andnetworth should be positive.

• The units enjoying term loan / workingcapital loan from other commercialbanks / financial institutions are not eligibleunder the scheme.

Extent of : Minimum assistance : Rs.2.00 lakhs per unit.Assistance Maximum assistance: Rs.100.00 lakhs per unit.

WORKING CAPITAL TERM LOAN – FOR EXISTING UNITS

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Promoters : a) Minimum 25% of the working capitalcontribution estimation in respect of loans upto

Rs.10.00 lakhs (including existing loanoutstanding, if any):

b) Minimum 33% of the working capitalestimation in respect of loans aboveRs.10.00 lakhs (including existing loanoutstanding, if any)

Terms of : Rate of Interest: Refer interest rate table atassistance Annexure-I.

Repayment period: Not exceeding 5 yearsincluding moratorium of six months from thedate of first disbursement of WCTL.

Security:

a) Charge on the current assets being financed.

b) Minimum 100% collateral security as per theprevalent Lending Policy.

c) Irrevocable and unconditional personalguarantees of the promoter directors/corporate guarantee to be obtained whereverapplicable.

d) Further mortgage of primary assets of theunit, if it is already secured to theCorporation. In case, the earlier loan is closedand the charge on the primary assets isreleased, the charge on existing assets shouldbe created fresh. The existing primary assetsmay be taken towards collateral securityrequirements.

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Objective : To provide timely and adequate working capitalassistance in the form of WCTL to MSMEsfor purchase of raw materials from KSSIDC.

Eligible : Sole Proprietorship, Partnerships,Borrowers Co-operative Societies, Private and Public

Limited Companies etc., engaged in themanufacture / production, processing orpreservation of goods.

Extent of : Minimum LoC Amount Rs.5.00 lakhs andfinance maximum Rs.100.00 lakhs.

Upto 80% of the cost of raw materials proposedfor purchase from KSSIDC, within theLoC Sanction Limit.

Promoters' : 20% of the proposed cost of raw material.Contribution

Terms of : Rate Of Interest: Will be same as applicable toAssistance the term loans for MSMEs. In case of default,

a penal interest of 2.5% p.a. over and above thegross rate of interest is applicable on the defaultamount for the period of default.

Repayment Period: The interest on the amountoutstanding shall be paid on monthly basis. Theprincipal shall be repaid on or before the end of15th month from the date of first disbursement.Pre-payment / fore closure of the account willnot attract payment of any premium.

LINE OF CREDIT FOR PURCHASE OF RAW MATERIALS

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Collateral Security: First charge on the rawmaterials financed under the scheme shall beobtained. Apart from this, collateral securityshall be obtained as detailed below :

• Collateral security of 30% of the loan forexisting borrowers of the Corporation instandard category and who are working onprofitable lines;

• Collateral security of 50% of the loan forexisting units (other than existing borrowers)who are working on profitable lines;

• Collateral security of 100% of the loan inrespect of other cases;

Time limit for : The assistance sanctioned under the scheme isAssistance valid for a period of 12 months from the date of

sanction. The borrower may draw the amountin installments based on his requirementswithin this period. any amount undrawn aftera period of 12 months shall lapse automatically.The interest shall be changed on the loanoutstanding for the period of usage of LoC.

LAFD/ : Following is the fee structure prevailing atProcessing Fee present:

a. LAFD : 0.25% + Service Tax

b. Upfront Fee : 0.25% + Service Tax

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Objective : To provide financial assistance to small &medium scale units to undertake variousactivities necessary to increase their sales indomestic and foreign markets and to createphysical marketing infrastructure.

Eligible : • Existing units (atleast for two years) withBorrowers good track record (no default to any

financial institutions / bank and assetclassified as ‘standard’ by bank) and hassound financial position and has positive networth & earned profit in last two years).

• Existing or new units with good track record& sound financial position are eligible forassistance under the scheme forestablishing permanent exhibition ortrade centres.

Extent of : Minimum Rs.5.00 lakhs and maximumfinance Rs.50.00 lakhs.

Terms of : Rate Of Interest: Refer interest rate tableAssistance at Annexure I

Repayment Period: Maximum of 8 yearsincluding moratorium period.

Security: 100% of loan amount.

ASSISTANCE FOR MARKETING RELATED ACTIVITIES

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Objective : To extend financial assistance for taking overof existing assets / enterprises.

Eligible : Individuals, partnership firms, private &Borrowers public limited companies, co-operative

societies etc., engaged in respective activitieseligible for assistance from the Corporationand in existence for minimum period of2 years with good track record.

Eligible : • Plant & Machinery : Plant & Machinery ofCriteria : a reputed make with a minimum residual life

of 10 years supported by Chartered Engineercertificate and as assessed by the technicalofficers of the Corporation .

• Land & Building: Industrial / Commercialproperties located at prominent placeswithin municipal limits with a minimum of20 years residual life. The building shouldbe of good quality and assistance will besubject to certification by the officers of theCorporation.

• Nature & extent of finance – Financialassistance will be in the form of term loannot exceeding 70% of the estimated value ofthe assets being considered for finance.The minimum limit of finance under thisscheme will be Rs. 10.00 lakhs and themaximum as per the prevailing normsapplicable for term loan under the generalscheme.

ACQUISITION OF EXISTING ASSETS & ENTERPRISES

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Term of : Interest : Refer interest rate tableAssistance at Annexure-I.

Repayment period : Not exceeding 5 yearsincluding moratorium period upto 12 months.

Security : 100% of the loan other than amountearmarked for purchase of land and building.

Others : No lien certificate from the seller’s banker /financial institutions on the assets beingpurchased in case they are financed bybanks / financial Institutions.

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Objective : The objective of the scheme is to providefinancial assistance for the construction /purchase of cinema halls, multiplexes,production of short TV serials, software forvisual media publicity and feature films.

Eligible : Assistance under the scheme is available forAssets meeting the expenditure on

• Construction / purchase of buildings formultiplexes and cinema halls (the landcost will not be eligible for financing )

• Purchase of capital equipments formultiplexes, cinema halls and software forvisual media publicity and for productionof TV Serials.

Eligible : Proprietary concerns, partnership firms,Borrowers co-operative societies, public & private

limited companies promoted by reputedpersons with good technical / financialbackground and also with good networth.

Project Cost : The project cost will not exceed Rs. 20.00 crore.

Extent of : • Maximum 70% of the cost of the proposedFinance fixed assets in the case of cinema halls and

multiplexes.

• 50% of the total production and postproduction cost in the case of featurefilms, TV serials and software for visualmedia publicity.

ASSISTANCE TO ENTERTAINMENT INDUSTRY

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3444

Repayment : • Upto 8 years including a moratoriumPeriod period of 2 years in the case of Cinema

Halls / Multiplexes.

• In the case of production of feature films,TV serials and software for visual mediapublicity, the loan has to be repaid either ina single installment in the 13th month orbefore the release of the feature film,TV serials, Software for visual mediapublicity whichever is earlier.

Security : • All the assets created in the form of landand building, furnitures and equipmentsunder the scheme should be mortgaged /hypothecated. 100% collateral security inrespect of furnitures, interior decorationand equipments.

• 200% in respect of film production includingsoftware for visual publicity.

• Power of attorney to collect subsidy fromGovernment wherever eligible.

• Assignment of negative rights by way of atripartite agreement between the filmprocessing laboratory, the borrower andthe Corporation.

• Assignment of intellectual property rights inall form of media (in respect of films,TV serials and software for visual mediapublicity)

3445

Rate of : Refer interest rate table at Annexure I.interest

Others : Comprehensive Insurance Policy should beobtained from any insurance co-recognised byIRDA. All statutory requirements need tobe complied.

3446

Objective : To provide financial assistance for setting up ofAmusement Parks, Convention Centres,Restaurants, Travel and Transport and TouristServices Agencies.

Eligible : Sole proprietorships, partnerships, co-operativeBorrowers societies, private / public limited companies.

Areas of : Amusement Parks: Assistance will be extendedAssistance for providing facilities such as toy trains,

boat clubs, giant wheels, merry go-rounds,roller coasters, pony rides, mini zoos,small restaurant other assets like conveyorsand rope-ways etc.

Convention Centres: Convention and culturalcentres used for conducting culturalprogrammes as well as conferences, seminars,exhibition etc. Audio – visual aids likeoverhead projectors, film and slide projectorsand sound systems will be considered forassistance.

Hotels and Restaurants: Assistance is availablefor hotels and restaurants in tourist locationslike pilgrimage centres, historical places,beaches, ports, wildlife sanctuaries and picnicspots. Hotels and Restaurants which are locatedon highways and small towns which cater tothe needs of tourists will also be considered forassistance. The restaurant should have aminimum area of 50 Sq. Mtrs (500 Sq.ft.).Assistance is provided for fixed assets like land,building, furniture and equipments.

ASSISTANCE TO TOURISM RELATED ACTIVITIES

3447

Travel and Transport : Financial proposals oftravel agencies with a fleet of cars and / or vanswill be considered. Such travel facilities shouldbe at or in the vicinity of leading hotels, airports,railway or bus stations, amusement parks,cultural and convention centres. Mini buses,full- fledged buses and taxis which satisfy thenorms of tourism development & Government.The minimum number of vehicles cars / vanshas to be three. The transport operator / agencyshould have a tie-up with a leading hotel /amusement park.

Tourist Service Agencies: The agency shouldprovide services like booking air, road and railtickets, hiring taxis, booking hotels and touristguides. These agencies should operate “ frommajor cities and must have a network of theirown. In the case of tour operators, travel; agentsand excursion agents, it is necessary that theyobtain recognition from the Department ofTourism. Office buildings, including facilitiessuch as telephone, telex, fax, photocopier, officeequipment, personal computers etc., will alsobe considered for assistance.

Mobile Canteen / Catering : Assistance forrunning mobile canteen/catering service foracquisition of vehicles, kitchen, equipment,catering, equipments, grocery, cutlery, linen etc.

Terms Of : Interest : Refer interest rate table at Annexure-IAssistance : Repayment period : Upto 8 years including

moratorium period of upto 24 months.Security : As per the lending policy of theCorporation.

3448

A) Assistance to doctors / qualified medical practitioners :

Purpose : For purchase of the premises / renovation ofthe existing premises, acquiring fixed assets likefurniture, computers, office automation,ambulance, car / van, interiors and medicarerelated equipment required for a clinic.

Eligible : Doctors / medical practitioners with aBorrowers bachelor’s degree in any branch of medicine

from recognised institute / university forsetting of clinic. People holding bachelor degreein radiology, bio-physics and bio-technology,with atleast 5 years experience and a certificateof practice from a relevant authority. Qualifiedveterinary doctors are also eligible forassistance. The promoters should be an incometax payee for last 2 years.

B) Assistance to Nursing Home / Hospitals:

Purpose : For establishment of new and expansion /modernisation of existing nursing homes andhospital. Loan available for land, building andequipment for diagnostic, monitoring thetherapeutic use, air conditioners, ambulanceetc.

Eligible : Qualified medical practitioners or entrepreneursBorrowers employing qualified doctors to run the

hospital / nursing homes are eligible forassistance. The project must be backed by

ASSISTANCE TO HEALTH CARE SERVICES

3449

expert of a post graduate doctor on fulltime basis.

C) Assistance for acquiring Electro Medical Equipment:

Purpose : For procurement of new electro medical andrelated equipment with accessories likeCT scanners, Endoscopy, Gastroscopy,X-ray etc., Loan is also available forestablishing diagnosis laboratories.

Eligible : Hospitals, Nursing homes and medicalBorrowers practitioners with relevant qualification in

general medicine, dentistry, radiology etc.,and entrepreneurs employing qualifieddoctors are eligible for assistance foracquiring electro medical equipment for theirprofessional use.

Terms of : Rate of Interest: Refer interest rate table atassistance : Annexure-I.

Repayment period: Upto 8 years includingmoratorium period of 24 months.

Security: As per lending policy of theCorporation.

3450

SCHEME FOR SMALL ROAD TRANSPORT OPERATORS

Purpose : To meet expenditure towards cost of chassis,body building, initial taxes and insurance foracquiring transport vehicles.

Eligible : Small road transport operators.Borrowers

Loan limit : Need based (Upto 20 vehicles per operatorincluding existing vehicles).

Second-hand vehicles are not eligible forassistance.

Terms of : Rate of Interest: Refer interest rate table atassistance Annexure-I.

: Repayment period: 36 to 50 months includingmoratorium period of 3 months in respect ofall categories of vehicles.

Security: 100% on all loans.

3451

Objective : The purpose of assistance will be towardsmeeting the expenses on consultancy,documentation, audit, certification fee,equipment etc.

Eligible : Existing industrial concerns in the MSMEs sector.Borrowers

Eligibility : MSMEs having good track record of pastCriteria performance and sound financial position.

The concerns should:

a) have been in operation for a period of at leasttwo years.

b) have earned profit and / or declareddividend during the preceding two financialyears ; and

c) not be in default to institutions / banks inpayment of their dues.

Promoter’s : Minimum promoters’ contribution would beContribution 25% of the project cost.

Terms of : Rate Of Interest : Refer interest rate table atAssistance : Annexure-I.

Repayment period : Upto 6½ years excludinga moratorium period varying between6 to 9 months in case of only machinery /equipments.

ACQUISITION OF ISO 9000 SERIES CERTIFICATION

3452

Objective : To encourage Food Processing Industriesto take up technology upgradation /setting up of new unit / modernisation ofexisting units

Eligibility : • Units are eligible for a grant / financialCriteria assistance of 25% of the cost of plant &

machinery and civil works (subject toreducing the cost of ineligible itemsprescribed by the Ministry) subject tomaximum of Rs.50.00 lakhs.

• Sanctions under the scheme to women,SC /STs is given priority.

• The schemes shall cover specified sectorsfor activities leading to value additionand shelf life enhancement.

Eligible : Individuals, Firms, Co-operatives, CompaniesBorrowers and PSUs.

Note :

• This scheme is launched by Ministry of Food ProcessingIndustries, Government of India w.e.f 1st April 2007.For details in this regard, Ministry’s websitewww.mofpi.nic.in may be accessed.

• Presently there is a restriction on sanction of financialassistance to Grain Milling Sector. The same will be availableas and when the restriction is removed.

• K.S.F.C is one of the financial institutions identified forimplementing the scheme.

SCHEME OF FINANCIAL ASSISTANCE TO FOOD PROCESSING INDUSTRIES

3453

Objective : To provide financial assistance on the strengthof the rent earned by non-residential propertieslocated within the city and municipal limits ofBangalore, Mangalore, Hubli, Dharwad,Gulbarga, Shimoga, Bhadravathi, Mysore andBelgaum and earning gross rent earned of notless than Rs.25,000/- per month from eligibletenants of the premises. The properties locatedoutside the Bangalore City Corporation limitswill also be considered on case to case basisdepending on the location and infrastructuraladvantages enjoyed and rent earned. Thetenants occupying the building should bereputed multi-national companies, nationalisedand private sector banks, all India financialinstitutions, insurance companies, profitmaking public and private sector companieswhich are in existence for a minimum periodof 5 years and earned profits etc.

Eligible : Proprietary concerns, partnership firms,Borrowers private / public limited companies, trusts and

co-operative societies are eligible for assistance.

Limit of : Minimum of Rs. 10 lakhs and maximum ofAssistance Rs. 500.00 lakhs in the case of companies and

co-operative societies and Rs. 200.00 lakhs inall other cases.

RENTAL DISCOUNTING SCHEME

3454

Extent of : The extent of assistance will be determinedAssistance & on the basis of rent received after deductionsRate of Interest towards TDS, Municipal Taxes, Insurance etc.

The exact amount of assistance will be workedout on the basis of net present value and futurerents by discounting at a rate of 15% p.a. Therate may change from time to time and it willbe binding on the beneficiary of the assistance.The repayment shall be monthly installmentsas computed above. In case of default, penaltyat 2% p.a. over and above the contracted rateshall be charged on the defaulted amountfor the period of default. The calculations ofthis interest shall be on monthly compoundingbasis.

Security : • The assignment of the rights of the lessor toreceive the rents from the tenants andexecution of necessary documents.

• The personal guarantees of the promotersavailing the facility as per the terms ofsanction.

• The collateral security for the assistance shallbe by way of first mortgage of the subjectproperty considered under the scheme andhypothecation of movable assets like DG set,lift etc., attached to the premises.

3455

Others : A tripartite agreement will have to be enteredamong the owner of the premises (beneficiary),tenant and KSFC

• The property will have to be insured by thebeneficiary of assistance.

• Processing Fee : The application under thescheme shall be accepted on payment ofprocessing fee as per the norms of theCorporation besides management fee of0.5% of the sanctioned assistance payableat the time of documentation. Furtherdocumentation charges shall also be paid asper the norms of the Corporation.

34

Objective : To promote energy saving MSMEs by providingfinancial assistance thereby contributing toenvironmental improvement and economicdevelopment in the State.

Eligible : Sole proprietary concerns, partnerships, co-Borrowers operative societies, private and public limited

companies etc.

Eligibility : • New and existing projects in Micro, SmallCriteria and Medium Enterprises (MSME) Sector, as

defined by the MSMED Act, 2006 will beeligible.

• Existing units should have a satisfactorytrack record of past performance and soundfinancial position & should not be in defaultto institutions/banks.

• The loans sanctioned by the Corporation onor after 01.08.2008 are eligible for finance.

• Loans availed for installation of energysaving equipment/under Credit LinkedSubsidy Scheme (CLCSS) are also eligible tobe covered under the scheme.

Promoters’ : Minimum 20% of the project cost.Contribution

Extent of : Upto 75% of the fixed assets in the cost ofFinance project and maximum assistance is as per the

prevailing lending policy.

SCHEME FOR FINANCING ENERGY SAVING PROJECTS

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Term of : • Rate of Interest : The rate of interestAssistance applicable to the term loans for MSMEs shall

be charged for the loans under the schemewith a special rebate of 0.5% p.a. for promptpayment.

• Repayment period : Upto 6 years includinga moratorium period of 1 year.

• Security : First charge on the assets financedunder the scheme shall be obtained. Apartfrom this, collateral security shall be asfollows :

(i) Collateral security of 30% of the loan forexisting borrowers of the Corporation instandard category and who are working onprofitable lines.

(ii) Collateral security of 50% of the loan forexisting units (Other than existingborrowers) who are working on profitablelines.

(iii) Collateral security of 100% of the loan inrespect of other cases.

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Objective : To extend financial assistance for newMSMEs service sectors and for expansion,modernisation, diversification etc., by theexisting units.

Eligibility : Projects which are eligible to be financed as perCriteria the SFCs' Act, the details of which are given

under the first part of the brochure are coveredunder General Scheme of the Corporation.

Project Cost : The project cost shall not exceed Rs. 12.00 crorefor SMEs. The project cost can go up toRs. 20.00 crore in respect of service andinfrastructure projects.

Promoters’ : Varying between 12.5% and 25% dependingContribution upon the location of the project, category etc.

Debt Equity : Not exceeding 2:1 in respect of loans aboveRatio Rs.10.00 lakhs and upto 3:1 for loans below

Rs. 10.00 lakhs.

Nature and : Under the General Scheme, the assistance willAmount of be in the form of term loan calculated on theAssistance basis of maximum 75% of the proposed fixed

assets to be acquired i.e., the land, building,plant & machineries etc. However, the termloan will be subject to a maximum of Rs. 200.00lakhs in the case of proprietary and partnershipconcerns, and Rs. 500.00 lakhs in the case ofco-operative societies, private and publiclimited companies. Under specialcircumstances these limits could go uptoRs.800.00 lakhs and Rs.2000.00 lakhs

GENERAL SCHEME

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respectively with prior consent of SIDBI.However the paid up capital and free reservesin case of companies shall not exceed Rs.20.00crore.

Term of : Rate of Interest: Refer rate of interest table atAssistance Annexure I

Repayment period : Maximum of 8 years witha moratorium upto 2 years normally. Inextremely deserving cases, the maximumperiod can go upto 10 years.

Security : Apart from mortgage/ hypothecationof proposed fixed assets, suitable collateralsecurity is also insisted as per the lending policyof the Corporation.

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Objective : Micro Credit or Micro finance refers toextending small loans to very poor families forself employment projects that generate income,allowing them to care for themselves andtheir families. The distinctive feature ofthis concept is empowerment of womenfinancially. The Women will be organisedinto Self Help Groups (SHGs) and JointLiability Group (JLGs) and will be involvedin productive activities through micro finance.

Purpose : To create a national network of strong, viableand sustainable Micro Finance Institutions(MFIs) from the informal and formal financialsector to provide micro finance services to thepoor, especially women.

Eligibility : • The Constitution of the MFI should be RegisteredNon-Banking Financial Company (NBFC). Itshould be in existence for at least five years and/ or should have a demonstrated track record ofrunning a successful micro-credit programme atleast for the last three years.

• The MFI should have been rated by mainstreamrating agencies such as CRISIL/CARE/ICRA/M-CRIL etc. with acceptable investment grade rating.The rating should be valid and should not be lessthan 6 months old.

• It should have been extended term loan by SIDBI.• The MFI should have bee making cash profits for

at least last two years.• The MFI should have only women members as

its clientele.• The MFI should have achieved minimum

outreach of 3000 members.

SCHEME FOR MICRO FINANCE ACTIVITY

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• The MFI should have maintained a satisfactoryand transparent accounting, MIS and internalaudit system.

• The MFI should have its accounts audited by aChartered Accountant firm.

• It should have a separate system of accounts andmonitoring for its micro finance operations.

• The MFI should be showing consistent growthin its loan portfolio / members and networthstrength.

• It should have plans to broad-base its resourcebase further.

• The term loan extended by the Corporationshould be utilised within Karnataka for non-farmactivities.

Terms of : Rate of Interest: 13.5% (net) payable monthlyassistance : and a liquidation damage of 2% p.a. to be

charged in case of default in payment ofprincipal and/or interest.

Repayment period: Upto 4 years from the dateof disbursement including moratorium periodof 6 months.

Security : (1) Hypothecation of the book debts.(ii) Fixed Deposit pledge agreement offering10% of the loan amount in the form of FixedDeposit with the Corporation. Personalguarantee of the main individual promoters.

Limit of : The minimum assistance will be Rs. 25.00 lakhsassistance : and maximum exposure should not exceed

Rs. 500.00 lakhs at a time.

Operation of : The scheme will be operated at Head Office.the scheme

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3462

Fund : • Equipment Lease FinanceBased • Hire Purchase SchemeActivities • Rental Discounting Scheme

• Bill Discounting Scheme

• Equity Participation

• Factoring Facility

• Subscription to Non-Convertible Debentures

Non Fund : • Deferred Payment GuaranteeBased • Under Writing of Public IssuedActivities • Insurance Activity

• Financial Guarantee

Financial : • Issue ManagementServices : • Pre-Issue Project Appraisal

• Foreign Letter of Credit• Project Report Preparation

The operation of the schemes such as BillDiscounting, Equity Participation, FinancialGuarantee, have been temporarily suspended.The fee based and financial services activitiessuch as Underwriting of Public Issue, IssueManagement, Pre-Issue Project Appraisal andProject Report Preparation are undertaken bythe HP & FS department at head office.

HIRE PURCHASE & FINANCIAL SERVICES

3463

Objective : KSFC introduced Hire Purchase schemewhich provides a fast easy alternative toready cash. Under this scheme finance isavailable for procuring vehicles, machineryand equipments.

Eligibility : Industrial concerns should :

• Have been in commercial productionfor two years and earned net profits.

• Have no accumulated losses.

• Have record of regular payment to financialinstitutions / banks.

Professionals should :

• Be in practise and be income tax payees.

• Have a net worth equivalent to the hirepurchase value.

• Have a record of regular repayment tobanks / financial institutions, if any.

Commercial transport vehicle operatorsshould :

• Have been in the transport business foratleast two years.

• Have positive networth

• Have a record of regular repayment tobanks / financial institutions.

Minimum : For industrial Concerns :Assistance • Rs. 5.00 lakhs for plant and machinery /

equipments.

HIRE PURCHASE

3464

• Rs. 1.00 lakh for vehicles.

For Commercial transport operators :

• Rs. 2.00 lakhs.

Amount of : Upto 90% to 100% of the asset amount.Assistance & From 10% to 0% of the hire purchase amount.Promoters’ In case of 100% finance, the Hirer is requiredContribution to pay 3 months advance EMIs.

Repayment : The repayment period varies between 3 to 5Period & years with a moratorium of one to three monthsMoratorium : period from the date of 1st disbursement.

Interest Rate : Interest rates will be charged on IRR basis& Fees depending on the in-house credit rating.

AAA rated : 13.50%AA rated : 14.00%Normal : 15.00%

The following fees are charged :

• HP processing fee of 0.5%

• HP Management fee of 0.5%

• Service Tax as applicable from time to time.

Security : Hypothecation of the assets under HirePurchase assistance and personal guarantee ofthe promoters. Minimum collateral security of100% of the assistance will be insisted.However, in deserving good cases, ManagingDirector can relax the requirements ofcollateral security.

The scheme is in operation in head office only.

3465

NON-CONVERTIBLE DEBENTURES

Objective : This scheme was introduced to subscribe theprivate placement of the debentures issued bythe corporate entities. The proceeds of thisdebenture issue should be utilised by thecompanies to meet their long term workingcapital and capital expenditure.

Eligibility : Only the corporate entities who satisfy theCriteria following norms :

• The Company should fall under the relevantprovisions of SFCs' Act with regard toeligibility for such assistance.

• The company should have been inproduction for at least 3 years and earnedprofits.

• The company should have positivenetworth.

• The company should not be in default tofinancial institutions or banks.

• Funds raised through issue of debenturesshould be utilised to meet long term workingcapital margin and up to 50% on capitalexpenditure.

Limit of : The minimum limit of assistance will beAssistance Rs. 30.00 lakhs and the maximum limit will be

the amounts permissible from time to timeunder SFCs' Act.

Extent of : The extent of assistance will be determined onAssistance the working capital gap and the capitaland the expenditure requirement. The working capitalInterest Rate gap will be calculated by taking the total

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requirements of working capital and the bankfinance.

The coupon rate on NCD facility will be decidedbased on the in-house credit rating. The presentcoupon rates are as under :

AAA rated company : 13.50%AA rated company : 14.00%Normal Category : 15.00%

A rebate of 1% is allowed for prompt payment.

Security : • Collateral security to the extent of 125% ofthe NCD facility sought.

• Second charge on the current assets of thecompany.

• Corporate Guarantee of the company andpersonal guarantee of the directors.

• Post dated cheques for interest andsubscribed portion of the NCD.

Duration of : The maximum redemption period ofDebentures debentures will not exceed five years.

Others : • The company should pay 0.50%Management Fee and 0.50% Brokerage andunder writing commission.

• The company should pay documentation feeas per the norms of the Corporation.

• The company should appoint debenturetrustee as required and trustee fee is to bepaid as per prevailing rates.

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Criteria : • SSI / MSI units who have a minimum threeyears track record with consistentprofitability and positive net worth.

• SSI / MSI unit should sell its finishedproducts under deferred payment.

• The unit should not be in default toinstitutions.

• Bill to be discounted must relate to domestictrade debts arising in the usual course ofsupplier’s business.

• Based on credit sale of the company for lastthree years limit will be fixed for utilisationfor each individual case to be reviewed everyyear.

• The company should provide disclaimerletter from the bank / s who have providedworking capital indicating that the supplybills are not financed by the bank and theyhave no charge on the proceeds of the bill.All advance payments are paid to suppliersaccount to the bank providing workingcapital.

• The customers of the company should bereputed or the company should havedealings with these customers for aminimum period of two years regularly.

• The factoring facility will be provided onlyfrom head office.

• Legal documents must be executed by thecompany to the satisfaction of theCorporation.

FACTORING

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• The supplier must submit a monthlystatement indicating sale and collections.

Extent of : 80% of the invoice value including insurance,Assistance : freight and taxes as up front payment subject

to the maximum exposure of Rs. 150.00 lakhsper unit including all other fund based limitsprovided to the unit by the Corporation.

Deferred : The maximum credit period of the bills eligibleCredit Period for discounting would be 180 days.

Interest Rates : The current interest rate will be 13.50% p.a.inclusive of interest tax (interest will be in tunewith market conditions)

The Corporation will charge penal interest asunder :

• For delays between 00-30 days : 2% p.a.• For delays between 30-60 days : 3% p.a.• For delays between 60-90 days : 4% p.a.

Other Charges : Factoring charge of 2% will be charged on thelimits (to be paid up front) at the time ofsanction.

Initial : Rs. 2000/- for factoring limit upto Rs. 25 lakhsprocessing fee and Rs.5,000/- above Rs. 25 lakhs.

Processing : Non refundable fee of ½% age on the limitcharges requested for sanction.

Fee for : At 0.25% of the factoring limit renewed.renewal

Factoring fee : 2% of additional factoring limit (paid up frontbefore availing additional limit).

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If the proposal is accepted the initial processing fee so collectedwill be adjusted towards the regular processing fee. If theproposal is rejected, the initial processing fee will be forfeited.

Security : Personal guarantee of the promoters and anyone or a mix of the following securities will beobtained.

• Purchaser’s bank guarantee.

• Co-acceptance of bills by Banks / FinancialInstitutions.

• Corporate guarantee / Counter guarantee.

• Collateral security of immovable propertiesand / or pledge of shares by the seller or thepurchaser.

• Charge on assets of the purchaser / sellercompany covering under the scheme.

Mechanism : • Bills of exchange / promissory notes drawnby the supplier should be accepted by thepurchaser for payment on specified dated.

• Bills of exchange / promissory notesaccepted by the purchaser shall be submittedto the Corporation for discounting alongwith invoice copy, LR, RR dulyacknowledged by the customer foracceptance of goods.

• On receipt of bills of exchange / promissorynotes the Corporation will discount bills andpay to the supplier’s bank after collecting thediscounting charge and collection of interestupfront.

• If the purchaser fails to pay on the due dates,the supplier shall make the payment.

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Objective : KSFC has been operating the scheme ofopening Foreign Letter of Credit for importingthe capital goods through commercial bankexclusively for our borrowers since 1995.The scheme is operated in the HP & FSdepartment of head office and the salientfeatures are as below :

Details to be submitted by the borrower :

• Application form.

• Undertaking on Rs. 50 Non Judicial StampPaper.

• Specific Import License (Goods not coveredunder OGL).

• Copy of Import & Export Code.

• Latest Proforma Invoice.

Terms of : Upfront 25% margin money at the time ofPayment establishing the LC and the remaining payment

will be arranged by KSFC by issuing Letter ofComfort.

Opening : Rs.2,000/- fixed charges Plus 0.5% of the sightCharges FLC up to 90 days. Plus 0.075% per month

beyond 90 days.

FOREIGN LETTER OF CREDIT

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GENERAL INSURANCE

KSFC has entered into a strategic alliance with IFFCO-TOKIOGeneral Insurance Company to market the Non Life InsuranceProducts. This would enable the clients of KSFC to havecredit and the insurance under one roof. The premiumtariffs applicable are same as the other insurance companiesand at no extra service charges. An exclusive Insurance Cellwith well trained staff is in operation at Head Office.The details of the general perils covered are:

• Fire

• Earth quake

• Burglary

• Machine breakdown

• Marine

• Cash safe / transit

• Fidelity guarantee

• Household Insurance

• Personal Accident Cover

• Medical Insurance

• Vehicle Insurance

• Bankers Indemnity

• Trade and Office

• Electronic Equipment.

• Travel Insurance.

OTHER FINANCIAL SERVICES

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LIFE INSURANCE

KSFC has entered into strategic alliance with Life InsuranceCorporation Of India, the largest and oldest Life InsuranceCorporation of the country to market its Life Insurance Products.The Corporation will help the customers in identifying thetailor made policies suitable for their future financial needsand extend professional service from procurement of policiesto settlement of claims/payment on maturity to the customers.The clients of KSFC can avail, as welfare measures to covercritical illness risks / death risks of their employees and alsoavail Group Gratuity schemes to cover their statutory liabilitiesand obtain tax exemptions on premiums paid. KSFC willarrange presentation of individual and group products to ourclients at their premises. The services are available at no extracost at Head Office and at all the branches of the Corporationsituated in the district head quarters. The Corporationbelieves that Life insurance is not only an investmentdecision but also a risk protection. The key persons of theventures who have availed the loans from KSFC can availspecial policies to protect against the risk of burden of debtin case of happening of any unfortunate event to the key person.KSFC do have well trained staff for servicing the clients of lifeinsurance at Head Office as well as Branch Office.

UTI MUTUAL FUND PRODUCTS

KSFC has entered into MOU with UTI MF for distributingUTI MF products. UTI Mutual Fund is one of the leadingMutual Fund in the country. It has got more than Rs.38,358.00crore worth of assets under its management. It has got morethan 40 schemes of offer, suitable for short term long term

3473

investments in the category of debt funds, balance funds andequity linked schemes. The individuals, co-operative societies,private limited companies, charitable trusts and PF trusts,co-operative banks can invest their investible surplus in the UTIMutual Fund Products.

The Corporation has got professionally trained persons toguide in the investment process of UTI Mutual Fund atHead Office and Branch Offices. The service carries no extracharges.

MONITORING AGENCY :

As per SEBI guidelines any company which is issuing morethan Rs. 500 crore shares for subscription by the public, hasto appoint a monitoring agency. KSFC is a notified agencyfor this. The work involves inspection of the books of accountsand physical assets of the company every six months, until thecompletion of the project to verify and certify that the proceedsof the issue are utilised towards the objects of the issue declaredin the prospectus. The companies planning to issue IPOscan utilise the services of Corporation for Monitoring Agencyassignment as per SEBI guidelines.

INFRASTRUCTURE DEVELOPMENT :

Infrastructure is an integral part of the services sector and playsa crucial role in the industrial development. With rapid growthof the economy in recent years, the importance and urgency ofinfrastructure development has increased. Recognising this, theCorporation as part of diversification, has taken up infrastructuredevelopment projects with public / private participation.

3474

The Corporation has been initially focusing on identifyingvaluable lands in the prime localities in and aroundBangalore City owned by various government departments /governmental agencies / registered societies / trusts etc.,exploring suitable infrastructure development on joint venturebasis. In respect of such joint venture projects, theCorporation takes care of all the financial tie-ups fordevelopment of these properties. The expected income out ofdifferent revenue models will be shared with the ownersof the properties in appropriate ratio on mutually agreeableterms and Corporation understanding the after studyingeconomics / viability.

The proposed joint venture projects will be of world class andstate of art technology. It could be IT park, shopping mall,commercial complex, SEZ, etc., depending upon the locationof the property and commercial potentiality of the place.This new activity will ensure sustained cash flow for theconcerned owner of the property as well for KSFC by way ofrentals and other earnings which will be mutually beneficialto both the institutions.

A separate infrastructure development department is created forthis purpose and is fully functional.

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PROCEDURE FOR AVAILING FINANCIAL ASSISTANCE

A special cell viz., Entrepreneurial Guidance (EG) Sectionheaded by an Asst. Gen. Manager operates at the Head Officeof the Corporation to guide the entrepreneurs in respect ofvarious schemes operated by the Corporation, loan facilityavailable, terms of assistance etc.,

A brief project profile / report will have to be given by thepromoters soon after they approach the concerned BranchManager / AGM(EG) at HO with the loan proposal. The projectreport will also be prepared by the Branch Manager / AGM(EG)in consultation with customer. The project report so preparedwill be countersigned by the concerned entrepreneurs forhaving given consent for the same. Towards this, a nominal fee(non-refundable) will be charged as detailed below:

Particulars Fee per project profile

For loans upto Rs. 25.00 lakhs Rs.1,000/-

For loans between Rs.25.00 lakhs Rs.2,000/-and Rs.50.00 lakhs

For loans above Rs.50.00 lakhs Rs.3,000/-

(Note: In case the promoter submits comprehensive projecton his own, preparation of project profile by the EG Deptmay be dispensed with).

In respect of project proposals where the project cost is lessthan Rs.500.00 lakhs, the concerned Branch Manager inrespect of Branch Office / AGM(EG) in respect of HO shall acceptthe proposals without placing it before PCC. Only such proposalswhere the project cost is Rs.500.00 lakhs andabove will be placed before the Project Clearance CommitteeMeeting at Head Office.

PROCEDURE

3476

After receipt of the project profile (vide annexure -II) alongwith the bio-data and net worth details (vide Annexure-III),the main promoters are called for discussion with thecommittee and after discussions, if the project is foundsupport worthy the application is issued. A set of threeapplications is issued. The duly filled applications have to besubmitted in duplicate along with various enclosures as perchecklist given in the application form. One applicationmay be retained by the entrepreneur for reference. The othertwo application form will have to be submitted along with theapplicable processing fee.

The following are the fee structure prevailing at present.

Application processing fee ½ % of the loan amount

Upfront fee:

• Small Scale Entreprises and others ½ % of the loan amount

• Medium Scale Enterprises 1% of the loan amount

The upfront fee will have to be paid at the time of legaldocumentation or before availing the first disbursement of theloan amount.

The application processing fee and upfront fee are non refundable.However, in case the loan application is rejected, refund upto amaximum of 75% of processing fees paid is allowed on a case tocase basis.

Legal Fee : In addition to the above, documentation fee forlegal scrutiny of the title deeds, execution of hypothecation andmortgage deed etc., at 0.1% of loan amount is being charged.

The EG department after scrutinising the application and theenclosures submitted, draws the receipt for the processing fee

3477

paid and forwards the application to the Credit Departmentthrough General Manager (Credits). The Credit Departmentappraises the project and disburse funds after the sanction of loanand will monitor the implementation of the project till the projectis completed and final disbursement made.

Entrepreneurs are advised to contact the Deputy General Manager(Credits) for processing of the loan applications.

The Credit Department is also provided with legal officers forlegal scrutiny of the documents and documentation thereafteri.e., after the loan is sanctioned and terms and conditions ofsanction are accepted by the promoters. The above is theprocedure in brief for availing the financial assistance from theCorporation. For further details the promoters are advised topersonally contact the following officers

Assistant General Manager (EG)Deputy General Manager (Credits)

Promoters are also advised to meet the General Manager (Credits),if they have any problem or for seeking any clarification.

In the Branch Offices, promoters are advised to meet theBranch Managers to discuss their projects and to finalise theproposals.

3478

Question : After acceptance of my application do I take it thatthe loan will be sanctioned ?

Answer : The application is accepted based on the projectsubmitted, background of the promoters,experience etc., and agrees “in principle” tosanction the loan. This does not mean that is acommitment on the part of the Corporation tosanction the loan as the project will have to beappraised in detail and viability established andthe norms of finance for sanction of loan adheredto.

Question : When the project study has been found to be viableand details given in the form of a ‘project feasibilityreport’, why should the Corporation appraise theproject again ?

Answer : No doubt the project feasibility would have beenstudied by the promoters and found that the projectis worthy of implementation. The institutionappraises the project to ensure the viability fromthe institution’s point of view and also to find outwhether it fits into the norms of finance of theCorporation. Another important aspect is that theinstitution having financed a number of projectsin the past, is in a better position to identify theweak links in the project and accordingly advisethe promoters to attend to these weak links so thatthe project viability will be strengthened. Thepromoter may not be in a position to appreciatethese points especially if he is a first generationentrepreneur.

FREQUENTLY ASKED QUESTIONS (FAQs)

3479

Another important point for the institution toappraise the project is to find out under what termsand conditions the loan will have to be granted andfor fixing the repayment period, security to beoffered by the promoter etc.

Question : After I submit the application how long will it takefor me to get the loan sanctioned ?

Answer : It all depends on how fast the information askedfor is submitted. In this regard entrepreneurs areadvised to give complete information asked foralong with the application as detailed thereof.During appraisal further information on the project,promoter etc., may be required. The promoters areadvised to give information quickly so that theprocessing can be quickened and loan sanctionedearly. The process of appraisal totally depends onhow fast the information is given by you.

Question : How quickly can I draw funds after the loan issanctioned and the terms and conditions areaccepted by me ?

Answer : The disbursal of funds from the Corporation cantake place soon after you execute the legaldocuments and enter into a loan agreement withthe Corporation. The legal documents to beexecuted are, mortgage / hypothecation deeds forsecuring land, building and plant & machinery. Inaddition, personal guarantee deeds have to beexecuted by the promoters.

3480

The above are in respect of primary security. Inrespect of collateral security separate mortgage /hypothecation deeds have to be executed.

For further details on documentation you areadvised to contact respective legal officers in thedepartment.

After execution of the legal documents,disbursement of funds can take place immediatelythereafter, provided you fulfill the terms andconditions of sanction including first investmentclause which are to be complied before drawingthe first installment of the loan as per the terms ofsanction.

Question : Can I draw the entire loan amount in oneinstallment ?

Answer : No. The loans are disbursed in installmentsdepending on the progress achieved, securitycreated, fulfillment of terms and conditions etc.,However, if you have completed the project in allthe respects before seeking disbursement, the loancan be drawn in one installment after theCorporation satisfies itself that all the terms andconditions have been fulfilled.

For further details regarding drawal of loantowards building, plant and machinery etc., theentrepreneurs are advised to contact the respectiveappraisal and disbursement teams or DeputyGeneral Manager of the Credit department orBranch Managers.

3481

In this connection, the promoters are advised tokeep in close contact with the appraisal anddisbursement teams as once the project issanctioned loan, the loanee and the institutionbecome the partners in progress. Entrepreneursshould not hesitate to discuss any problemsthey have in the implementation of the projectand seek the guidance and support of theCorporation. Entrepreneurs are assured thatany genuine and reasonable request will beconsidered on merits.

34

Sl. Category of borrowers / loans Interest ratesNo. (w.e.f. 1.6.2009)

(in %age)Gross Rebate Net

1 Term Loans above Rs.50,000/- and 14.50 1.50 13.00up to Rs.2,00,000/- and other thanloans indicated in Sl.No.3,4 & 5

2 a. All Term Loans (including WCTL)over Rs.2,00,000/- to MSMEs,

b. Acquition of ISO accreditation,

c. SRTOs and Acquisition ofprivate vehicles.

d. Tourism related activities;Amusement parks, ConventionCentres, Restaurants, Travel &Transport, Tourist Service Agency,Hotels & Restaurants, MobileCanteen/Catering, Resorts,Service Apartments 15.00 1.50 13.50

e. Health Care Services: Assistance toDoctors/Qualified MedicalPractitioners, Nursing Homes/Hospitals, Electro MedicalEquipment.

f. Assistance to qualified Professional:Management Professionals,Medical Professionals,Accounting Professionals,Architects & Engineers,Veterinary Clinics.

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ANNEXURE-I INTEREST RATE STRUCTURE

34

g. DG Sets, Mobile Generators.

h. Godown / Warehouse

i. Office Automation.

j. Training Institutions

3 a. Construction / BuyingCommercial Complexes,

b. Construction activities likeResidential Apartments, Villas,Group Housing, Layout Formation /Property Development

c. Shopping Complexes. 16.50 1.00 15.50

d. Industrial Estates, IT Software Parks

e. Ready built office space,Construction/BuyingReady built show rooms andSales outlets, DevelopmentMaintenance and ConstructionRoads / Infrastructure Projects

f. Professional Education Institutes.

4 a. Corporate loans, AMARA scheme,Bridge loans, Finance to existing assets

b. Entertainment industry (including 16.00 1.00 15.00Cinema Theatre / Multiplex,Production of feature films,TV Serials, Dubbing / Recording,Software for visual media publicity).

c. Rental Discounting scheme.

5 Privileged Entrepreneurs Scheme 14.50 — 14.50

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34

Notes to the above interest rate structure :

I. REBATE AND CONCESSIONS :

A. General

• In case of RSR loans, additional concession of 0.50% will beprovided in the interest rate.

• Additional Rebate of 0.50% can be extended for

a) Credit Rated Clients with a rating of AAA, which isequivalent to ‘Lowest Risk’ i.e. ‘LL’ as per Credit RiskAnalysis Models.

b) Fresh sanctions to ISO certified units, made on or after01-08-2008.

• Rebate for prompt payment shall be provided in two slabs of1% and 1.5% as indicated in the interest table.

• The rebate will be allowed on current interest for the promptpayment of both principal and interest rate payment and onor before due dates for the respective quarter.

• In case the borrower commits default in paying the Principal /Interest instalment of any one quarter / month, then the saidborrower shall not be eligible for rebate for two successivequarters / months, including the one in which the promptpayment does not take place.

B. REBATE AND CONCESSIONS FOR SC/STENTREPRENEURS

The loans to Scheduled Caste / Tribe entrepreneurs will besanctioned at the above applicable rates. However, effective rateto these entrepreneurs will be 4% p.a. After the difference between

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34

the lending rate and effective rate of 4% p.a will be met by theGOK as per the KSFC circular No. 786 dated : 30-3-2007.

C. Maximum Cap on Rebate :

The over all rebate allowed to any unit under different categoriesshall not exceed 2.00%.

II. PENAL INTEREST :

Penal interest of 2.5% p.a. over and above applicable interestwill be charged in case of default on the defaulted amountfor defaulted period to all categories of borrowers.

III. LOAN AMOUNT STANDING TO DETERMINEINTEREST RATE :

While applying the interest rate, the total loan outstanding(i.e., existing and proposed loan) will be the criteria for decidingthe rate of interest.

IV. DEFERRED PAYMENT IN CASE OF SALE U/S.29 OFSFCs ACT:

The rate of interest for deferred payment liability in case ofsale of assets will be the highest current rate of interest,even if the aggregate loan is less than Rs. 2.00 lakhs.

V. TRANSFER OF LOAN LIABILITY :

The original contract rate of interest will continue to applyin case of transfer of loan liability

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34

1 Name of the applicant/unit :

2 Address a) Office & :Phone No.

b) Unit & :Phone No.

3 Constitution :

4 Size of the Industry :

5 Proposed Activity :

6 a) Land / Plot area :

b) Building- Existing :

c) Proposed :

7 Power requirement - Existing :

Addl / proposed :

8 Employment Potential - Existing :

Addl / proposed :

9 Present policy of KSFC/ :SIDBI & Government

10 Name and address of the Banker :

11(a) Details of Promoter/s:

Sl Name of the Age in Qualification Net-worth ExperienceNo promoter Years

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ANNEXURE-II PROJECT PROFILE

34

11(b) Background of the Promoter/s:

11 (c). Net-worth statement of the promoter/s:-

1) Sri/Smt.

(Rs.in lakhs)

Sl Description Appx. ValueNo

TOTAL(A):

LIABILITIES(B):

TOTAL NETWORTH:(A-B)

11(d) Background of the Project:

12. The details of the loan availed and present position of theloan account is as below:-

Sl Particulars Name of the unitNo & Account No.

1 Date of Sanction

2 Loan Amount Sanctioned

3 Loan Amount Disbursed

4 Loan Balance

5 Principal Dues

6 Interest Dues

7 Other Debits

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34

13. Financial performance of the unit/ firm/ company &associate concerns:

( Rs. in lakhs)

M/s. M/s.

Sl. Particulars 2007 2008 2009 2007 2008 2009No.

1 Sales & other income

2 Depreciation

3 Net profit

4 Cash Generated

5 Share Capital

6 Reserve & Surplus

7 NetWorth

14. Location / Land Building

15. Details of Plant & Machinery:

(Rs. in lakhs)

Sl. Particulars Dealer / CostNo. Manufacturer

16. Details of Raw materials (like quantity, source andavailability):

17. Working Capital arrangements / facility from bank etc.,:

18. Essential Services:

a. Market:

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34

19. Cost of the project / Expansion:(Rs. in lakhs)

Sl. Particulars Original as RevisedNo. submitted

1 Land & its Development

2 Building & Civil Works

3 Plant & Machinery

4 Contingencies

5 Misc. fixed assets

6 Pre-operative expenses

7 Interest during implementation

8 Deposits

9 Working Capital margin

TOTAL:

20. Means of finance:

A. Equity

Particulars Original as Revisedsubmitted

1 Promoters’ capital2 Unsecured Loan with int.3 Subsidy/Soft Loan/Soft Seed Capital4 Others

TOTAL :

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34

B. Debt

Particulars Original as Revisedsubmitted

1 K.S.F.C. Term Loan/Corporate Loan2 Working Capital Loan3 Unsecured Loan with int.4 Others

TOTAL :

TOTAL (A)+(B):

C Debt equity ratio

D Promoter/’s Contribution

21. Security

Sl Particulars As Revised Term loan Term loanNo submitted % Amt. % Amt.

by thepromoter

1 Land

2 Building & Civil works - Existing (WDV) - Proposed

3 Plant & Machinery- Existing (WDV)- Proposed

4 Collateral Security

TOTAL:

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34

22. Margin Retained:

A Margin

B Overall security margin

23. COLLATERAL SECURITY:

Details of collateral security required as per lending policynorms and available / offered are as under:-

SL Particulars Value Eligible Collateral Collateral RemarksNo of Term Stipulated available /

fixed Loan % Amt. offeredassets

1 Land Presentland cost /SR rate atRs............

2 Building

3 Plant &Machinery

4 CollateralSecurities -Property 1.

2.-FD/NSC/LIC (SV)

TOTAL:

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34

24. Brief details of Profitability Estimates:

Sl. Particulars I II IIINo

a) Utilisation %

b) Sales/ Turnover

c) Expenditure (Excl. Dep. & Int.)

d) Depreciation

e) Interest on Term Loan

f) Profit before tax

g) Income Tax

h) Profit after tax

i) DSCR

25. Lending Policy:

Lending Priority

Collateral Security requirementas per Lending Policy

26. The promoter/s have submitted the following details:-

Documents to be submitted Compliance

Project Report

Bio-data Networth

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34

Audited Balance Sheets &Profit & Loss account of the unitand associate concern

Land details like sale deed/allotment letter/ Lease deed

Building plan & estimate

Details of plant & machinery

Quotations of plant & machinery

Collateral security details

27. Remarks :

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34

Sl. Particulars DetailsNo.

1 Name

2 Father’s / Husband’s Name

3 Age

4 Unit’s Address & Phone No.

5 a) Present

6 b) Permanent

7 Residential Address /Phone/ Mobile

a) Present

b) Permanent

8 Qualification

9 Experience (Enclose Certificates wherever available)

No of Years Employer Designation Last Salary Drawn

10 Present Profession

11 Are you a valid passport holder ?If ‘yes’ [copy to be enclosed]

a) Issuing office & address

b) Passport Number

c) Date of issue

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ANNEXURE-III BIO-DATA AND NETWORTH

34

12 Are you an Income Tax Assessee ?If ‘yes’ [Copy of I.T. Clearance tobe enclosed]

a) Permanent Account No.

b) Income declared last year

Address of your Bank,A/c. No. &Date of opening

13 Are you a member of any club ?If ‘yes’

a) Name & Address

b) Membership Fee Paid

A) IMMOVABLE PROPERTIES:

(Properties owned or jointly owned with family members withdetails of eligible percentage of share)

Sl Description (Mention specific Value How acquiredNo. details such as Sy.No,/Site [Rs. in [Self/Ancestral /

No./Door No./Street/Town etc., lakhs] Gifted]and also Dimension)

SUB TOTAL (A)

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34

B) MOVABLE ASSETS :

a) Cash on Hand

b) Cash at Bank

c) Investments

d) Deposits

e) Shares / Debentures/Others

f) Jewellery

g) Any movable assets, vehicles etc.,

SUB TOTAL (B)

GRAND TOTAL OF (A) & (B)OR TOTAL VALUE OF ASSETS

C) LIABILITIES :

Sl Description ValueNo. [Rs. in lakhs]

TOTAL LIABILITIES:

TOTAL NETWORTH(Assets ~ Liabilities):

PLACE: SIGNATURE

DATE :

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34

Note: Enclose copies of Property Documents, Pass Books,Shares, Debentures etc., in proof of your net worth.

For further information please contactAssistant General Manager (EG)

K.S.F.C. Head Office"KSFC BHAVANA"

No.1/1, Thimmaiah RoadBANGALORE – 560 052.

Ph.No. : 22258127 / 22263322Fax : 080 – 22250126E-mail : info@ksfc.in

Website : www.ksfc.inor Any of our Branch Offices

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34

1 Bangalore Rural Zone 5 Dharwad Zone# 48, 1st Floor, Church Street Poona Bangalore RoadBangalore – 560 001 Rayapur,Phone : 25587355 Dharwad – 580 009Fax : 080-25586718 Phone : 2322700 , 2322792

Fax : 0836-2322685

2 Mysore Zone 6 Belgaum Zone#2716, 1st “Floor, Hotel Sanman CompoundSourabha Chambers College RoadSri Harsha Road, Belgaum – 590 001Lashkar Mohalla, Phone : 2432387 & 2426369Mysore – 570 001 Fax : 0831-2432723Phone : 2332786Fax : 0821-2331545

3 Mangalore Zone 7 Davanagere Zone,# 330, 4th Floor # 1179/1,Somayaji House S Nijalingappa LayoutBunts Hostel Road, PB # 750 Near Ring RoadMangalore – 575 003 Davangere – 577 004Phone : 2443573 Phone : 08192-225176,Fax : 0824-2443939 225660

4 Gulbarga Zone# 31 & 32, Kings ComplexNear KBN HospitalStation RoadGulbarga – 585 101Phone : 222394Fax : 08472-224352

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ZONAL OFFICES

34

1 #48, I st & 2nd Floor 3 # 197, 1st & 2nd FloorChurch Street, West of Chord Road(M.G. Road Branch), Bangalore – 560 086Bangalore – 560 001 Phone : 23493739, 23495812Phone : 25594198 , 25597306 Fax : 080-23494628Fax : 080-25594836

2 8th Floor,Jayanagar ShoppingComplex, 4th Block,Jayanagar,Bangalore – 560 011Phone : 26637565, 26652277Fax : 080-26547165

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SUPER 'A' GRADE BRANCH OFFICE

34

1 Bangalore Rural 7 # 330, 3rd Floor,Branch Office # 48, Somayaji HouseIst Floor, Church Street, Bunt’s Hostel Road,Bangalore – 560 001 P B No.750,Phone : 080-25581357, Mangalore – 575 00325588981 Phone : 0824-2443554,

2443051

2 Hotel Sanman Compound 8 3rd & 4th Floor, AnanthaCollege Road Towers, Court RoadBelgaum – 590 001 Udupi – 576 101Phone : 2429243 , 2427043 Phone – 2526305 / 2526306Fax : 0831-2432723 Fax : 0820-252900

3 Poona Bangalore Road 9 Race Course RoadRayapur, Dharwad–580 009 Hassan – 573 201Phone : 2322235, 2322692 Phone : 268 703, 265 429Fax : 0836-2322685 Fax : 08172-266836

4 # 2716, 1st Floor 10 # 153/A, Near DC OfficeSourabha Chambers Opp : Mount CarmelSri Harsha Road, Convent, K R Road,Lashkar Mohalla, Subhash NagarMysore – 570 001 Mandya – 571 401Phone : 0821-2426197, Phone : 08232-226744,2437502 226745

5 # 31 & 32, 1st Floor, 11 CRS ComplexKings Complex Near KSRTC Bus StandNear KBN Hospital, M B Road,Station Road Kolar – 563 101Gulbarga – 585 101 Phone : 224757 &Phone : 08472-221407, 222537241648 Fax : 08152-222661

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6 Plot No.2, 12 # 86/2 & 88/2,Indl. Estate Hospet Road,B H Road, Ward No.21Tumkur – 572 103 Bellary – 583 102Phone : 2280089, 2280027, Phone : 08392-242719,Fax : 0816 – 2280089 242105

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1 Devaraj Urs 8 # L-8, Indl. EstateCommercial Complex Madikeri – 571 201TSB Circle (Gopi Circle) Phone : 08272-228588,Shimoga – 577 201 228143Phone : 08182-270198,224598

2 Near Basaveshwara 9 Neelana Goudra ComplexTheatre, Near IB Opp : LIC Office,Chitradurga – 577 501 PB Road, Haveri - 581 110Phone : 08194-224411, Phone : 08375-232362,222341 233722

3 Near Ibrahimpur Rly. Gate 10 Plot No.18-21,B Bagewadi Road 6th Main Road, ‘G’ Cross,Bijapur – 586 101 Sector No.24, NavanagarPhone : 276102 Bagalkot – 587 102Fax : 08352-277032 Phone : 235478

Fax : 08354-235482

4 Plot No.7, 11 # 1179/1,MP No.1-1-53 S Nijalingappa LayoutUdayanagar, Station Road Near Ring RoadRaichur – 584 101 Davanagere – 577 004Phone : 08352-227028, Phone : 08192-225049,232111 225660

5 8-9-16, Rachamma Complex 12 Dr. R N Godbole Building1st Floor, Bidar, CTS No. 6678 A, A-1, B-1Udgir Road, Near Jail, Vidyanagar,Bidar – 584 401 GadagPhone – 08482-228236, Phone : 08372-239052,226381 276041

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6 1st Floor, Raykar Manor 13 SPS Complex,Kaikini Road 1st Floor, Vaniyar RoadKarwar - 581 301 Chamarajnagar – 571 313Phone : 08382-221006, Phone : 08226-722150 ,221888 722801

7 PB # 168, 14 KPTCL RoadNear District Field Near Lakshmi TalkiesHosamane Extension Road Koppal – 583 231Chickmagalur – 577 101 Phone : 08539-220664,Phone : 230 447, 2234045 222157Fax : 08262-230695

Disclaimer : This brochure is published mainly for the benefitof the entrepreneurs. KSFC shall not be responsible for anylegal or other liabilities arising out of anything stated in thisbrochure nor for any error or omission therein. KSFC furtherreserves the right to modify / alter any of the terms, conditions& policies stated in this brochure.

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