ONE TIME SETTLEMENT OF DUES (OTS) POLICY OF PICUP
The need for OTS arises due to the fact that whenever we initiate recovery proceedings and issue notice u/s. 29 of the SFCs Act, 1951 to recover our dues from the defaulting companies, the companies in most of the cases obtain stay orders from Hon'ble High Courts and the matter remains pending for a long time. During this period we are not able to recover our interest/principal dues from such units as the matter remains subjudice. In order to improve our recovery from all such cases and also from he chronic defaulters and in order to reduce the Non Performing assets (NPAs) of the Corporation, the mechanism of OTS of dues was evolved.
ELIGIBILITY FOR OTS
(a) The OTS proposal shall be accepted under the following conditions: -
The case for OTS should be considered only when the company is in default for the last 2 to 3 years. During this period PICUP shall ascertain genuiness of the default committed by the company and it will be confirmed that the company is not a willful defaulter.
Incase after availing the credit facility, the company fails to implement its project i.e. the company is unable to start its project at all, such cases shall be considered for OTS.
In case after implementation of the project, the company is unable to start its commercial production and there is no hope to start the commercial production in near future, such cases shall also be considered for OTS.
In case the company is showing losses in its Balance Sheet for the last 2 to 3 years and there are no sufficient cash accruals to meet out the institutional liabilities.
Present chronic defaulters including the cases under BIFR & litigation, where it has been ascertained that recovery of dues are very difficult and the cases under the category of Doubtful and loss assets as per the Non Performing Assets norms prescribed by IDBI.
There are changes in the Govt. policy, which are likely to adversely affect the profitability of the financed unit.
Financial soundness of promoter/particular company who have requested us for OTS shall be examined to ascertain the financial feasibility of proposed OTS.
While considering eligibility, the category of borrower's account (SS, D-I, D-II and Loss Assets) as on 31.3.99 will 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.
The Corporation will settle only those accounts against OTS which have been sanctioned by the Corporation. The Seed capital, margin money loan and other assistances which were extended as an agent of State Govt./IDBI will not be settled by the Corporation but will be settled separately by the borrower with the lending institution.
The OTS in standard and sub-standard category would be discouraged.
Non bonafide cases, even if they fall in the preview of OTS policy shall not be considered for OTS by PICUP.
The OTS will be decided on the basis of outstanding liabilities on last quarter terminal billing date.
Amount already paid prior to submission of OTS proposal will not be taken into account while considering the OTS. In other words, the OTS facility will not be applicable with retrospective effect and any penal and compound interest paid by the borrower in the past will not be considered towards OTS mount. However, the amount deposited with the proposal as earnest money will form a part of the OTS mount.
The borrower will be required to make the payment of interest tax, if applicable in the case, over and above the OTS amount.
ARO (Accounts Receivable Others) and Watch & Ward expenses etc. shall be payable by the company over and above the OTS amount.
PROCEDURE FOR OTS
In all cases the following steps and formalities should be completed before acceptance of any case under OTS:-
(a) Balance Sheet/Performance Analysis
Balance Sheet/Performance analysis of the unit shall be done in detail which should effective and informative with a view to ascertain the eligibility of the company for OTS.
(b) Valuation of Assets
In case the proposal for OTS is received alongwith 5% of proposed OTS amount as earnest money by way of D.D. in favour of PICUP, both external & internal valuation of the fixed assets (which have been mortgaged to PICUP) of the unit shall be carried out. Both the valuation shall be analyzed & put up to committee for finalization of OTS which shall fix the valuation to be considered for finalizing OTS. The amount of OTS should not be fixed less than the amount of valuation.
(c) Amount of OTS to be worked out as per matrix
EARNEST MONEY FOR OTS
The borrower shall deposit at least 5% of the proposed OTS 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. OTS proposal not accompanied by D.D. as above shall not be considered by PICUP.
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.
AMOUNT OF OTS & MODE OF ITS PAYMENT
The amount of OTS shall be fixed based on valuation of the assets of the unit and t he amount prescribed under the matrix as detailed above. The terms of payment of OTS amount shall be fixed on case-to-case basis based on following: -