RFC Yellow Pages

Term Loan Assistance:
* Purpose
* Norms of Financing
* Security/ Mortgage of Assets
* Nature of Mortgage
* Personal Guarantee and Collateral Security
* Security Margin
* Interest Rate
* Period of Repayment
* Favourable Indicators
* When We Say Sorry

Restrictive List

 

Purpose:

RFC grants loans for meeting the long term requirements of the concerns in the form of land, building, plant and machinery etc. Working capital requirement is also considered in its special schemes such as composite term loan scheme and single window scheme. In case of our regular and good borrowers assistance for working capital is also considered,under good borrower's scheme.

Norms of Financing:

*Minimum promoter's contribution: The Corporation stipulates a condition of minimum promoter's contribution which is presently 33% of the project cost. It may be suitably increased on case to case basis considering various factors of the project.
*Debt Equity Ratio(DER): Not to exceed 2:1 in any case. However, the Corporation normally allows maximum DER of 1.8:1.
* Debt Service Coverage Ratio(DSCR) : Not below 1.7:1

Security/ Mortgage of Assets:

Loans are granted against the first charge ( pari- passu charge in case of joint finance) of the existing and future fixed assets ( viz. land, building, machinery and other tangible assets of the concern). However, on availability of working capital finance from Banks, the second charge in favour of bank on the fixed assets mortgaged to the corporation, can also be considered/ allowed, on the request.

Nature of Mortgage:


To minimize the expenditure and delay in obtaining the loan by the entrepreneurs, RFC does not insist on registered mortgage of land and buildings, except in rare cases, allows advances on equitable mortgage of land and buildings and hypothecation of plant and machinery wherever original documents are available. We expect from our entrepreneurs that only unencumbered assets having clear and marketable title deeds are offered as security.

Personal Guarantee and Collateral Security:

The Corporation creates the charge on the assets being financed. In addition to the charge on existing as well as proposed assets, the Corporation also secures the loan by taking personal guarantee of the promoter, partners and directors.

In cases where the project is considered risky or where net worth of the promoters is not adequate, collateral security, 3rd party guarantee is also taken of persons of repute. The Corporation also takes collateral security in certain cases which involve acquisition of second hand plant and machinery,assistance under Single Window Scheme, under NEF scheme, Assistance in rented premises, mining industry, transport loan or projects which are considered risky or in cases of those industries where in the opinion of the Corporation there is limited scope or fast changing technology projects. The collateral security may be of full value of loan, or reduced amount depending upon the risk perception. The property furnished for collateral security should be easily marketable/ mortgagable having clear title and should not be an agricultural land.

Security Margin:

The Corporation generally grants loans retaining a security margin of 30% on assets. Higher margin varying from 40% to 50% is retained on moulds, dies, kilns and certain traditional industries like cotton ginning, oil , guargum etc. and for second hand P&M if considered for finance.

Interest Rate Structure:
The Corporation charges interest depending upon quantum of loan, status of the unit (i.e. SSI/Non-SSI) and type of entrepreneur etc. A glance at the chart given below will show the prevailing rate of interest applicable in your case. The interest rates are subject to change from time to time.

Chart :

INTEREST RATE STRUCTURE MADE EFFECTIVE FROM 01.06.2004 :

A-

1- Small Scale Units

2- Small Road Transport Operators (SRTOs)

Upto 20 numbers of vehicles.

3- For Hospital & Nursing Home and Tourism Related

Activities including Hotels and Restaurants etc.

Having project cost upto Rs.10.00 crores.

 

Existing rate of interest w.e.f. 01-01-2004 (As

Effective rate of interest after timely rebate w.e.f. 01-06-2004 in the cases sanctioned on or after 1-6-2004

 

per PG circular No.1036 dt.8-1-2004)

Other than Tourism, Commercial / Residential Complexes, Hospital & Nursing Homes

Tourism, Commercial / Residential Complexes, Hospital & Nursing Homes

i) Upto Rs.50,000/-

11.25%

9.50%

N.A.

ii) Above Rs.50,000/- & upto Rs.2.00 lacs

11.75%

10.25%

N.A.

iii) Loans exceeding Rs.2.00 lacs and upto Rs.25.00 lacs

12.50%

11.00%

10.50%

iv) Loans above Rs.25.00 lacs

12.75%

11.25%

10.75%

B - I) MSI/ other than Small Scale Industries (Non SSI Sector)

13.00%

11.50%

N.A.

ii) Small Road Transport Operators (SRTOs) above 20 number of vehicles

13.00%

11.50%

N.A.

iii) For Hospital & Nursing Home & Tourism Related Activities including Hotels and Restaurants etc. having project cost above Rs.10.00 crores

13.00%

-

11%


C-    Assistance to commercial complexes show rooms & sales outlets and residential complexes scheme :

     

i) Above Rs.2.00 lacs and upto Rs.25.00 lacs

12.50%

-

10.50%

ii) Loans above Rs.25.00 lacs (upto project cost of Rs.10.00 crores)

12.75%

-

10.75%

iii) Loans having project cost above Rs.10.00 crores

13.00%

-

11.00%

D- Project /activities eligible for assistance under TDMF and ISO 9000 Scheme:

11.50%

10.00%

N.A.

E-        Pass Book Scheme

Schemes for Working Capital Term Loan with the facility of deposit and withdrawal through pass book (including replenishment )where no flexi rate of interest shall be chargeable and no separate rebate would be available for timely payment :

(a)   Good Borrower Scheme :

i) SSI Sector (Small scale units, Hospital / Nursing Home and Tourism related activities including Hotels and Restaurants etc. having project cost upto Rs.10.00 crores)

11.50%

11.00%

11.00%

ii) MSI / Non-SSI Sector

12.50%

12.00%

12.00%

(b)   PGB, NAU AND SINGLE WINDOW SCHEME :

i) SSI Sector (Small scale units, Hospital / Nursing Home and Tourism related activities including Hotels and Restaurants etc. having project cost upto Rs.10.00 crores)

12.00%

11.50%

11.50%


ii) MSI / Non-SSI Sector

13.00%

12.50%

12.50%

F-     RTUF Cases :

(a) SSI Sector

Existing Effective rate of Interest as per PG Circular No. 1057 dt. 27-5-2004

Applicable Effective Interest rate (net of timely payment rebate)

 

i) Upto Rs. 50,000/-

10.25%

9.25%

-

ii) Above Rs. 50,000/- & upto Rs.2.00 lacs

10.25%

10.25%

-

iii) Loans exceeding Rs. 2.00 lacs and upto Rs.25.00 lacs

11.00%

11.00%

-

iv) Loans above Rs. 25.00 lacs

11.25%

11.00%

-

(b) MSI/ other than Small Scale Industries (Non SSI Sector)

11.50%

11.00%

-

Note: NO FURTHER REBATE FOR TIMELY PAYMENT SHALL BE AVAILABLE UNDER RTUF SCHEME.

The above revised effective interest rate in RTUF cases shall be applicable in the loan cases sanctioned on or after 1.4.04 but documents have not been executed so far and also in the cases sanctioned prior to 1.4.2004 but loan documents have not been executed so far provided conversion charges @ 0.5% are deposited besides revalidation charges, if any.

INTEREST ON FLAT RATE BASIS

The Corporation shall also provide financial assistance @ 7% (Flat Rate) for entire repayment period based on equated monthly installments. The minimum repayment period would be 5 years ( with six to 12 months moratorium period) with a clause of premium @ 5% on outstanding balance on prepayment. In case of default, the Corporation shall charge interest @ 12% p.a. on the amount in default and for the period of default. This system of flat rate interest shall be applicable in all schemes w.e.f. 01.06.2004.

Other parameters like promoter’s contribution, security margin, Debt Equity Ratio, maximum repayment period, etc. which are followed under Normal/ general Loans Schemes/ GB Schemes shall also be applicable.No rebate for timely payment as available in other loan schemes of the Corporation shall be available.

If any prospective borrower approaches the Corporation for availing financial assistance under this FLAT RATE SYSTEM, initially the financial assistance shall be considered at HO only.

NOTE : No further rebate for timely payment shall be available in RTUF cases.

 

1- The above effective rate of interest is after allowing following rebate for timely payment :

 

Nature of loan

Rebate for timely payment

a)

Loans upto Rs.50,000/-in General Loan Scheme

1.75%

b)

Loans exceeding Rs.50,000/- in General Loan Scheme including TDMF and ISO 9000

1.50%

c)

Pass Book Scheme (including GB Scheme and Single Window Scheme)

Net of Rebate

d)

RTUF cases

Net of Rebate

e)

Loans exceeding Rs.2.00 lacs in Tourism Related activities, commercial complex including multiplex / residential complex, Hospital & Nursing Home Schemes

2%


2- Timely Rebate under GB Schemes :

i)

Cases covered under GB schemes

2%

ii)

Potential Good Borrowers Scheme, WCTL to NAU

1.5%

iii)

Card Schemes :

 
 

- Platinum Card

1.25%

 

- Gold Card

1%

 

- Silver Card

0.5%

iv)

Good Borrowers (including switch over cases of Good Borrowers) seeking assistance of Rs.100 lac and above

2.5%

v)

Tatkal Scheme :

 
 

- For first year

nil

 

- Next two years

2%

3- The prevailing rate of interest on General Loan shall also be applicable on assistance provided under Good Borrower Scheme. However, the benefit of rebate under Good Borrower Scheme shall be @ 2% on timely payment and 1.50% in potential Good Borrowers Scheme / WCTL to NAU, Good Borrowers seeking financial assistance of Rs.100.00 lacs and above would be entitled to a rebate of 2.5%.

4-     In case of Platinum Card Scheme, Gold Card Scheme and Silver Card Scheme for good borrowers including flexible rate of interest, the rate of interest @ 1.25%, 1% and 0.5% (as the case may be) respectively below the prevailing rate of interest in General Loan Scheme shall be charged /applicable without any rebate on timely payment. No processing charges shall be levied in such cases to be sanctioned on or after 01-06-2004.

5-     Service charges @ 1% p.a. are applicable quarterly in addition to the applicable interest on loans granted under WCTL Scheme of Good Borrowers / Potential Good Borrowers and Tatkal Scheme.

6-     In case of loan upto Rs.5.00 lacs, to SC/ST entrepreneurs the rate of interest shall be 2% less than the rate of interest applicable to other entrepreneurs in terms of P&G Circular no. 535 dated 7-8-1993.

7-     In case of loans upto Rs.5.00 lacs, to disabled persons, a firm to which disabled person is partner having majority (not less than 51%) share, the rate of interest shall be 2% less than the rate of interest applicable to other entrepreneurs.

8-     Liquidated damages in case of default shall be charged on amount in default for the period of default at rates applicable prescribed by the Corporation from time to time. NO interest would be charged on the liquidated damages. However, the mode of appropriation of receipts shall remain unchanged.

9-     Interest on rehabilitation cases is to be charged as per the guidelines issued by the Reh. Cell.

10- NO further rebate for timely payment shall be available in RTUF cases and effective interest rate in RTUF cases shall be charged as mentioned in the chart at F.

11- No further rebate for timely payment shall be available in Pass Book Scheme and effective interest rate in Pass Book Scheme cases shall be charged as mentioned in the chart at E.

12- In the Schemes where post dated cheques for equated quarterly / monthly installments are obtained, the cheques shall be taken net of rebate. It should be clearly mentioned that EQI is calculated in net of rebate i.e. at the interest rate ____% minus ____% rebate. In case if the cheque is not realised then BO shall ask the borrower for the enhanced amount of EQI on actual rate of interest.

13- If the borrower desires or request to make the principal payment on monthly basis and interest on quarterly basis then, in such a situation PDCs for principal shall be obtained excluding the date of 1st March, 1st June, 1st September and 1st December i.e. interest due dates.

14- 2% rebate on timely payment for commercial complex and residential complex schemes, Hospital and Nursing Home Schemes be and is hereby extended treating them at par with tourism related activities for the cases sanctioned on or after 01-06-2004. The enhanced rebate of 2% in the commercial complex and residential complex schemes shall be made available after availment of 75% of the sanctioned loan amount with retrospective effect as otherwise the rebate for timely payment shall confine to 1.5%


Period of Repayment:
The period of repayment of loan is decided in each case depending upon the cash generation of the project. It varies from 5 to 10 years. The principal amount is repayable in quarterly instalments usually after 12 to 18 months from the date of commercial production. In case of projects relating to setting up of hotels or hospitals where comparatively higher implementation period is envisaged then the repayment period is determined after 24 months from the date of implementation of the project. Additionally the repayment schedule is also drawn up in a manner that the repayment obligation is tapered by asking for smaller Instalments in the initial years with progressively increasing amount.

Favourable Indicators:
While examining the applications approvals are granted considering the following favourable indicators. In case of new promoters the appraisal is done carefully to assess the viability of the project:
* Promoters should already have industrial experience either in the same industry or in some other industry.
* Promoters with high net worth and having adequate investible funds.
* Promoters disclosing high total income in their income tax returns.
* Promoters having good past track record with the Corporation with satisfactory dealings.
* Promoters should have invested heavily in the proposed project of their own without waiting for Corporation's assistance.
* Units where there is a firm tie-up arrangement for sale of the goods or who have experience of bulk exports.
* Promoters having adequate financial resources and setting up a 50% EOU/ infrastructure projects.

When We Say Sorry:

Our endeavour is to support every viable project of good promoter but we have to say sorry, if :
* The aggregate paid up capital and free reserves of your company/ concern exceeds Rs. 10 crores.
* Where the cost of the project exceeds Rs. 12 crores.
* Any Director of our Corporation is Proprietor/ Partner/Director/ Manager/ Agent/Employee or guarantor in your concern or having substantial interest in your concern (except for those Directors nominated by the Government or the Corporation).
* You propose to set up an industry, registration of which has been banned by the Industries Department/ RPCB/ State Govt.
* Your proposed industry, in the opinion of the Corporation, is hazardous in nature or otherwise not to be encouraged.
* It is in restrictive list of the Corporation/ SIDBI/IDBI, if any.
* When the antecedents/ banker's report about the promoters is not satisfactory.
* Setting up of a unit would adversely affect the existing units.
* Promoter's contribution is not adequate and promoter does not agree to increase it.
* Process technology is not proven on commercial scale.
* Availability of raw material is inadequate.
* Product does not have adequate market potential.
* Promoter hails from a group which is not taking steps to rehabilitate other assisted unit.
* Proprietor/ Partner/ Director of the company and / or their family members are defaulter in other assisted units of the Corporation/ Financial Institution.
* When the Corporation feels that proposed loan is not adequately secured.

Restrictive List of RFC (Schedule LA (S) 1/6 A)

S.No.    Name of the Item

1.                  Textile processing house except at Bhilwara and financing under RTUF scheme.

2.                  Waste Spinning

3.                  Ara Machine

4.                  MICR and computer stationery

5.                  Lement

6.                  Aluminium Utensils

7.                  Special Alloy Steel Castings

8.                  Welding Electrodes

9.                  Plastic Re-processing

10.              Solvent Extraction Units

11.              Mini cement plants and Clinker Grinding units

12.              All types of granite unit (Water/Kerosene based) excluding granite units manufacturing             slabs 2 X 8 and above based on kerosene (excluding slabs manufactured by gangsaw)

13.              All types of projects based on ODS (Ozone Depleting Substances)

14.              Mining project for Granite Blocks

15.              Projects of traditional and Mini Off set Printing Press

16.              Paper Board

17.              Photostat machine

18.              Paraffin Wax and Chlorinated Paraffin Wax.

 

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