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:
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 EFFECTIVE FROM 1.07.07

APPLICABLE FOR SSI /MSI /NON SSI SECTOR IRRESPECTIVE OF COST OF PROJECT

S.No.	NAME OF THE SCHEME	DOCUMENTED RATE OF INTEREST	TIMELY PAYMENT REBATE	EFFECTIVE RATE OF INTEREST
1.	SME Sector units (Industrial & Service Sector )-Upto Rs. 50,000/-	12.25%	0.75%	11.50%
2.	SME Sector units (Industrial & Service Sector except mentioned at S.No. 3 & 4) (Above Rs. 50,000/- & upto Rs. 2000 lacs)	14.00%	2.00%	12.00%
3.	Financing Against Assets Scheme (Long & Short Term) and Scheme for financing for builders /commercial /residential complexes /multiplex , hotels, hospitals etc. for  purchase of land & building	16.00%	1.00%	15.00%
4.	Construction of commercial /residential complexes, Hospitals, Nursing homes, Hotels & Tourism related activities (Project Loan)	15.00%	1.00%	14.00%

 

APPLICABLE FOR GOOD BORROWER SCHEMES

 

S.No.	NAME OF THE SCHEME	DOCUMENTED RATE OF INTEREST	TIMELY PAYMENT REBATE	EFFECTIVE RATE OF INTEREST
1.	Short Term Loan Scheme (STL), Working Capital Term Loan Schemes (WCTL), Units Promoted By Good Borrower(UPGB),  Special Purpose Working Capital Term Loan Scheme (SPWCTL)	14.00%	2.25%	11.75%
2.	Working Capital Term Loan to Non Assisted Units, Potential Good Borrowers Scheme, Tatkal Scheme	14.00%	1.75%	12.25%
3.	Platinum Card Scheme	14.00%	2.25%	11.75%
4.	Gold Card Scheme	14.00%	2.00%	12.00%
5.	Silver Card Scheme	14.00%	1.75%	13.00%

Note :-

1.	In case of loans 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 PG circular No. 535 dated 7th Aug., 1993.
2.	In case of loans upto Rs. 5.00 lacs, to disabled persons, a firm in 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.
3.	Liquidated damages in case of default shall be charged on amount in default for the period of default at rates applicable prescribed by Corporation from time to time. No interest would be charged on the liquidated damages. However, the mode of appropriation of receipts shall remain uncharged.
4.	Interest on rehabilitation cases is to be charged as per the guidelines issued by the Reh. Cell.
5.	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/ EMI has been calculated in net of rebate i.e. at the interest rate  ---% minus  --% rebate. In case if the cheque is not realized then BO shall ask the borrower for enhanced amount of EQI/ EMI on actual rate of interest.
6.	The rebate of 1.00% in the commercial complex/ residential complex scheme shall be made available after availment of 75% of the sanctioned loan amount with retrospective effect as otherwise the rebate for timely payment shall  be  available @ 0.75%.
7.	No processing charges shall be levied under Card Loan Scheme under Good Borrowers.
8.	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, Pass Book Scheme NAU and Tatkal Scheme.

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.

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

Textile processing house except at Bhilwara and financing under RTUF scheme. Waste Spinning Ara Machine MICR and computer stationery Lement Aluminium Utensils Special Alloy Steel Castings Welding Electrodes Plastic Re-processing Solvent Extraction Units Mini cement plants and Clinker Grinding units 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) All types of projects based on ODS (Ozone Depleting Substances) Mining project for Granite Blocks Projects of traditional and Mini Off set Printing Press Paper Board Photostat machine Paraffin Wax and Chlorinated Paraffin Wax.