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The case for OTS shall
be considered only when the company is in default for the last 2 to 3
years. During this period
PICUP, shall ascertain the genuineness of the default committed by the
company and confirm that the company is not a willful defaulter. |
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In case after availing
the credit facility, the company has failed to implement its project i.e.
the company was unable to start its project at all. |
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In case after
implementation of the project, the company is unable to start its
commercial production and there is no hope of starting the commercial
production in near future. |
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In case the company is
showing losses in its Balance Sheet for the last 2 to 3 years and there
are insufficient cash accruals to meet out the institutional liabilities. |
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Present cases of
chronic defaulters, which came under the category of Doubtful and loss
assets (as on 31.3.2004) as per the Non Performing Assets norms
prescribed by IDBI, including cases under BIFR & litigation where
recovery of dues is very difficult. |
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Such cases of sick
industries wherein changes in the Govt. policies have adversely affected
the profitability of the financed unit. |
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The OTS for
Sub-Standard/Standard category assets will be discouraged. |
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The Corporation shall
settle only those accounts against OTS that had been sanctioned loans by the Corporation.
The Seed Capital, margin money loan, Trade Tax Deferment Loans and
such other loans that were extended by the Corporation as an agent of
State Govt./IDBI will not be settled by it, but will be settled separately
by the borrower with the concerned lending institution. |
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Non - bonafide cases,
even if they fell in the purview of OTS policy shall not be considered for
OTS by PICUP. |
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The OTS amount shall
be decided on the basis of outstanding liabilities as on the last quarter
terminal billing date. Amount
already paid prior to submission of OTS proposal shall not be taken into
account while considering the OTS. The
ARO (Accounts Receivable Others) and Watch & Ward expenses etc. shall be
payable by the company over and above the OTS amount.
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The OTS amount shall
be calculated on the basis of a Matrix approved by the Board given in this
order.
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Financial soundness of
promoter(s)/particular company that requested for OTS shall be examined to
ascertain the financial feasibility of proposed OTS. In all OTS cases, Balance Sheet/Performance Analysis shall be
carried out with a view to ascertain the eligibility of the promoter(s)/company
for OTS. PICUP shall also carry
out an external/internal valuation of the fixed assets (mortgaged to PICUP).
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The amount of OTS
shall be decided on basis of the higher of the two amounts i.e. the
valuation of the assets of the
unit and the net worth of the promoters/guarantors after accounting for
other liabilities or the OTS amount as calculated on the basis of matrix.
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While considering
eligibility, the category of borrower’s account (SS,D-I, D-II and Loss
Assets) as on 31.3.2004 shall be taken into consideration.
This is to check the borrower’s tendency to slip into the lower
category in an attempt to get more waiver/benefits.
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The borrower shall be
required to deposit at least 5% of the proposed OTS offer amount as earnest
money by way of Demand Draft payable in favour of PICUP along with the OTS
proposal to show his sincerity and interest in settling the dues.
The amount of earnest money shall be adjusted against the down
payment of OTS (if approved) otherwise the same shall be adjusted against
the existing dues of the company. In no case the earnest money shall be refunded to the
borrower company. The earnest
money shall be fixed at 15% of the OTS offer amount in cases where Recovery
Certificates have been issued.
The decision taken in
this respect by the Managing Director shall be brought to the notice of the
Board on quarterly basis.
(b)
Cases which do not confirm to the above policy should be referred to the
Advisory Committee to be constituted by the Govt. of U.P. giving its
recommendations to the Board of Director for its consideration.
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The company shall have to pay
Interest at the Current rate of Interest (on date of sanction of OTS) on the
outstanding OTS amount.
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In the event of default in payment
of OTS dues as per the decided schedule, the company shall also have to pay
Penal/Compound Interest on the defaulted amount for the defaulted period.
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PICUP reserves the right to review
its decision of OTS in the event of any default in payment of OTS dues at
any stage and can cancel the OTS arrangement.
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In the event, it comes to the
notice of PICUP that the guarantors/company have submitted any false
information pertaining to valuation of their net worth/collateral security,
Balance Sheets or have concealed any other information from PICUP which
could have had a bearing on the OTS decision, then irrespective of the
payments made in OTS, the OTS arrangement would be cancelled and all
payments received under OTS shall be adjusted against loan dues and coercive
action for recovery shall be taken as per our policy.
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The company shal have to accept the
terms and conditions of OTS by signing the duplicate copy of OTS approval
letter of PICUP and depositing the same to PICUP which shall make it binding
on them to adhere to the terms and conditions of OTS, within 15 days of
issuance of OTS approval letter and also execute a Supplementary agreement
binding it to the terms and conditions of OTS.
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The OTS arrangement shall be for
settlement of loan dues of PICUP only.
The company shall have to settle on its own the loan dues or any
other dues (if any) of other institutions/banks/authorities.
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pertaining to the original loan sanction shall continue to apply except
modifications as above.
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OTS amount as
originally approved shall not be changed.
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Under the
revival/restructuring scheme for OTS, on a case to case basis, the entire
penal and compound interest may be waived, however the unit shall be
required to pay the balance amount of OTS alongwith entire Simple Interest
calculated at Current rate(s) of interest (prevailing during the period of
default) from the date of last payment received under OTS up to the date of
revival/restructuring of OTS. On
approval of the revival/restructuring of OTS, the interest component so
calculated shall be kept into an Interest Free Frozen Account.
Amount received from the unit after cancellation of OTS (if any)
shall be adjusted against the interest (kept in Interest Free Frozen Account
as above). The repayment
schedule of outstanding balance OTS amount and Interest Free Frozen Account
shall be fixed and drawn, to be paid concurrently on a proportionate basis.
All payments received under the revived/restructured OTS shall be
adjusted first against current interest overdues (if any) and thereafter the
balance amount shall be adjusted between OTS amount outstanding and Interest
Free Frozen Account on a pro-rata basis.
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In the event under the
revived OTS proposal, if the entire Simple interest alongwith OTS amount
outstanding is being received, then Managing Director shall be empowered to
waive off the penal and compound interest and approve revival of such
cancelled OTS cases. However,
in case revival of a cancelled OTS case is sought where part of Simple
interest is required to be waived off then approval for revival of such
cancelled OTS cases shall be considered by the concerned Committee
constituted by our Board.
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There shall be no
interest free period allowed for such revived/restructured cases of OTS.
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The unit seeking
revival/restructuring of cancelled/stuck up OTS, shall have to make an
upfront payment of an amount equal to 10% of the balance OTS alongwith the
proposal for revival of OTS proposal.
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The unit shall be
required to pay interest on the OTS amount outstanding at current rate of
interest.
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In case of
default/delay in payment of any installment, penal interest @ 2.5% per annum
and compound interest shall be charged on the defaulted amount for the
defaulted period.
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Such
revival/restructuring of OTS shall be done only once.
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In case of breach of
terms and conditions of revived/restructured OTS, the Corporation shall
retain the right to cancel this revival/restructuring of OTS and revert back
to recovery action.
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All other terms and
conditions of OTS scheme shall contine to apply, as originally approved, in
the revived/restructured OTS.
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In the event, it comes
to the notice of PICUP that the guarantors/company have submitted any false
information pertaining to valuation of their net worth/collateral security,
Balance Sheets or have concealed any other information from PICUP which
could have a bearing on the OTS decision, then irrespective of the payments
made in OTS, the OTS arrangement would be cancelled outright and all
payments under OTS shall be adjusted against original loan dues and coercive
action for recovery shall be taken.
OTS
POLICY