Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.1 These guidelines have been framed with a view to provide additional 1.1 These guidelines have been framed with a view to provide No change
avenue for recovery for the purpose of recycling the funds of Non- additional avenue for recovery for the purpose of recycling the
Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.2 The compromise should be a negotiated settlement under which THE 1.2 The compromise should be a negotiated settlement under which
LENDER should ensure to recover its dues to the maximum extent THE LENDER should ensure to recover its dues to the maximum No change
possible at minimum sacrifice by taking into consideration the facts and extent possible at minimum sacrifice by taking into consideration
circumstances of each case. the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

1

3. Cut-off-Date 3.1 A cut off date for the purposes of compromise should be ascertained. This
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.1 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.2 Foregoing of penal interest/liquidated damages.
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.5 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.6 Post Dated Cheques may be obtained for the balance payment and interest,
if any.
4.7 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
5. Other issues 5.1 In case of defaults on not adhering to installment deadlines penal interest @
2
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.1 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.
4.1 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.5 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
4.6 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
4.7 In case of consortium/co-financing of projects, sharing security on pari- For more clarity.
passu basis, OTS terms and conditions of the co-lenders may be
followed.
5.1 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.2 Right of forfeiture in case of persistent defaults despite fixation of 5.2 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.1 A Compromise Deed should be documented as per the advice of Legal 6.1 A Compromise Deed shall be documented as per the advice of Legal No change
Department for suit filed cases. Department for suit filed cases.
Documentation

6.2 The Legal Department should ensure that all documents/ securities are in 6.2 The Legal Department/F&A shall ensure that all documents/ securities For more clarity.
force till the entire settlement dues are recovered. are in force till the entire settlement dues are recovered unless
agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

3
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

1) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
2) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

4

100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
5
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.1 The borrower should come forward with a detailed settlement proposal 10.1 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.2 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.2 The concerned dealing official from Technical Department shall

10.3 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.4 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.5 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.3 The proposal should be examined in details by the Settlement
Advisory Committee.
10.6 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.4 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.7 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.5 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

6
 10.6 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.7 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.3 These guidelines have been framed with a view to provide additional 1.3 These guidelines have been framed with a view to provide No change
avenue for recovery for the purpose of recycling the funds of Non- additional avenue for recovery for the purpose of recycling the
Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.4 The compromise should be a negotiated settlement under which THE 1.4 The compromise should be a negotiated settlement under which
LENDER should ensure to recover its dues to the maximum extent THE LENDER should ensure to recover its dues to the maximum No change
possible at minimum sacrifice by taking into consideration the facts and extent possible at minimum sacrifice by taking into consideration
circumstances of each case. the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower

7

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.2 A cut off date for the purposes of compromise should be ascertained. This
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.4 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.5 Foregoing of penal interest/liquidated damages.
4.6 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
8
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.2 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.
4.2 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
 4.8 As far as possible proposal should provide for recovery of compromise
4.8 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.9 Post Dated Cheques may be obtained for the balance payment and interest,
4.9 Post Dated Cheques may be obtained for the balance payment and
if any. No change
interest, if any.

4.10 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.10 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.3 In case of defaults on not adhering to installment deadlines penal interest @ 5.3 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.4 Right of forfeiture in case of persistent defaults despite fixation of 5.4 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.3 A Compromise Deed should be documented as per the advice of Legal 6.3 A Compromise Deed shall be documented as per the advice of Legal No change
Department for suit filed cases. Department for suit filed cases.
Documentation

6.4 The Legal Department should ensure that all documents/ securities are in 6.4 The Legal Department/F&A shall ensure that all documents/ securities For more clarity.
force till the entire settlement dues are recovered. are in force till the entire settlement dues are recovered unless
agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

9
  The inspection of the secured assets shall be carried out before
submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

3) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
4) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

10

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
11
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
 third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.8 The borrower should come forward with a detailed settlement proposal 10.8 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.9 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

12
 10.9 The concerned dealing official from Technical Department shall
10.10 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note No change
(covering proposal of the borrower, eligibility as per THE
10.11 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.12 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.10 The proposal should be examined in details by the Settlement
10.13 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.11 Recommendations of the Settlement Advisory Committee shall be
10.14 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.12 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.13 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.14 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.5 These guidelines have been framed with a view to provide additional 1.5 These guidelines have been framed with a view to provide No change
avenue for recovery for the purpose of recycling the funds of Non- additional avenue for recovery for the purpose of recycling the
Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.6 The compromise should be a negotiated settlement under which THE 1.6 The compromise should be a negotiated settlement under which
LENDER should ensure to recover its dues to the maximum extent THE LENDER should ensure to recover its dues to the maximum No change
possible at minimum sacrifice by taking into consideration the facts and extent possible at minimum sacrifice by taking into consideration
circumstances of each case. the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change

13
 And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.3 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.3 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

4. Re-payment 4.7 Foregoing of lawyers fees and other legal, incidental charges. 4.3 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.8 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.9 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

14
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

-do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing
-do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.11 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.11 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.12 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.12 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.13 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.13 In case of consortium/co-financing of projects, sharing security on
For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.5 In case of defaults on not adhering to installment deadlines penal interest @ 5.5 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.6 Right of forfeiture in case of persistent defaults despite fixation of 5.6 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.5 A Compromise Deed should be documented as per the advice of Legal 6.5 A Compromise Deed shall be documented as per the advice of Legal No change
Department for suit filed cases. Department for suit filed cases.
Documentation

6.6 The Legal Department should ensure that all documents/ securities are in 6.6 The Legal Department/F&A shall ensure that all documents/ securities For more clarity.
force till the entire settlement dues are recovered. are in force till the entire settlement dues are recovered unless
agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/

15
 guarantors. 7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more 7.4 Valuation of assets:-
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT
important criteria for deciding the
approved Govt. Valuer.
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

5) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
6) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

16

100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
17
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-

 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.15 The borrower should come forward with a detailed settlement proposal 10.15 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,

18
 if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.16 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.16 The concerned dealing official from Technical Department shall

10.17 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.18 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.19 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.17 The proposal should be examined in details by the Settlement
10.20 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.18 Recommendations of the Settlement Advisory Committee shall be
10.21 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.19 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.20 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.21 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

19
S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification
o.
1. Aim/Objectives 1.7 These guidelines have been framed with a view to provide additional 1.7 These guidelines have been framed with a view to provide No change
avenue for recovery for the purpose of recycling the funds of Non- additional avenue for recovery for the purpose of recycling the
Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.8 The compromise should be a negotiated settlement under which THE 1.8 The compromise should be a negotiated settlement under which
LENDER should ensure to recover its dues to the maximum extent THE LENDER should ensure to recover its dues to the maximum No change
possible at minimum sacrifice by taking into consideration the facts and extent possible at minimum sacrifice by taking into consideration
circumstances of each case. the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.4 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this

20
 may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.4 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

4. Re-payment 4.10 Foregoing of lawyers fees and other legal, incidental charges. 4.4 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.11 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.12 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.14 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.14 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.15 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.15 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.16 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.16 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.7 In case of defaults on not adhering to installment deadlines penal interest @ 5.7 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.8 Right of forfeiture in case of persistent defaults despite fixation of 5.8 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

21
6. Legal 6.7 A Compromise Deed should be documented as per the advice of Legal 6.7 A Compromise Deed shall be documented as per the advice of Legal No change
Department for suit filed cases. Department for suit filed cases.
Documentation

6.8 The Legal Department should ensure that all documents/ securities are in 6.8 The Legal Department/F&A shall ensure that all documents/ securities For more clarity.
force till the entire settlement dues are recovered. are in force till the entire settlement dues are recovered unless
agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

7) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&

22
 Where the financial position of the company has not improved subsequently-
100% of the Principal
8) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
23
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
 2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors

24
 Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.22 The borrower should come forward with a detailed settlement proposal 10.22 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.23 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.23 The concerned dealing official from Technical Department shall

10.24 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.25 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.26 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.24 The proposal should be examined in details by the Settlement
Advisory Committee.
10.27 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.25 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.28 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.26 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.27 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.28 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific

25
 these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.9 These guidelines have been framed with a view to provide additional 1.9 These guidelines have been framed with a view to provide No change
avenue for recovery for the purpose of recycling the funds of Non- additional avenue for recovery for the purpose of recycling the
Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.10 The compromise should be a negotiated settlement under which 1.10 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are

26

2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.5 A cut off date for the purposes of compromise should be ascertained. This
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.13 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.14 Foregoing of penal interest/liquidated damages.
4.15 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.17 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
27
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.5 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.
4.5 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.17 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
 4.18 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.18 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
No change

4.19 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.19 In case of consortium/co-financing of projects, sharing security on
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
LENDER also. followed.

5. Other issues 5.9 In case of defaults on not adhering to installment deadlines penal interest @ 5.9 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.10 Right of forfeiture in case of persistent defaults despite fixation of 5.10 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.9 A Compromise Deed should be documented as per the advice of Legal 6.9 A Compromise Deed shall be documented as per the advice of Legal No change
Department for suit filed cases. Department for suit filed cases.
Documentation

6.10 The Legal Department should ensure that all documents/ securities are 6.10 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

28
  Value of securities (saleable/realizable value of physical
assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

9) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
10) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent No change
years
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan

29

Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
30
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
 Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.29 The borrower should come forward with a detailed settlement proposal 10.29 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.30 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.30 The concerned dealing official from Technical Department shall

10.31 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE

31
 10.32 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.33 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.31 The proposal should be examined in details by the Settlement
10.34 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.32 Recommendations of the Settlement Advisory Committee shall be
10.35 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.33 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.34 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.35 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.11 These guidelines have been framed with a view to provide 1.11 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.12 The compromise should be a negotiated settlement under which 1.12 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of
realization of security appear bleak, the primary/collateral securities are
insufficient to cover the out standings and projects under implementation which
are delayed/ projects abandoned due to the reasons beyond the control of the
borrower.
(c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable No change
chances of realization of security appear bleak, the primary/collateral
securities are insufficient to cover the out standings and projects under
implementation which are delayed/ projects abandoned due to the reasons

32
 beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to remote.
No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent opportunity cost of delay in early recovery shall also have to be
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the considered For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.6 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.6 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

4. Re-payment 4.16 Foregoing of lawyers fees and other legal, incidental charges. 4.6 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.17 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.18 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

33

 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
 Simple interest @ prevailing sector rate on reducing
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days. -do-
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment.
-do-
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days
from the date of dispatch of the sanction letter).
No change

4.20 As far as possible proposal should provide for recovery of compromise

4.20 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above No change

4.21 Post Dated Cheques may be obtained for the balance payment and
4.21 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any.
No change
4.22 In case where One Time Settlement is considered based on the One Time
4.22 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis,
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed. For more clarity.
LENDER also.

5. Other issues 5.11 In case of defaults on not adhering to installment deadlines penal 5.11 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.12 Right of forfeiture in case of persistent defaults despite fixation of 5.12 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.11 A Compromise Deed should be documented as per the advice of Legal 6.11 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.12 The Legal Department should ensure that all documents/ securities are 6.12 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The

34
 borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

11) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
12) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.

35
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
36
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.36 The borrower should come forward with a detailed settlement proposal 10.36 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since

37
 commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.37 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.37 The concerned dealing official from Technical Department shall

10.38 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE No change
10.39 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.40 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.38 The proposal should be examined in details by the Settlement
10.41 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.39 Recommendations of the Settlement Advisory Committee shall be
10.42 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.40 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy. No change

10.41 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.42 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.13 These guidelines have been framed with a view to provide 1.13 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.14 The compromise should be a negotiated settlement under which 1.14 The compromise should be a negotiated settlement under
No change

38
 THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.7 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.7 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

39
4. Re-payment 4.19 Foregoing of lawyers fees and other legal, incidental charges. 4.7 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.20 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.21 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.23 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.23 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.24 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.24 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.25 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.25 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.13 In case of defaults on not adhering to installment deadlines penal 5.13 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.14 Right of forfeiture in case of persistent defaults despite fixation of 5.14 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.13 A Compromise Deed should be documented as per the advice of Legal 6.13 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.14 The Legal Department should ensure that all documents/ securities are 6.14 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

40
7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

13) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
14) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

41
  Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
42
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.43 The borrower should come forward with a detailed settlement proposal 10.43 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

43
 Alongwith application, the borrower shall provide the following
documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.44 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.44 The concerned dealing official from Technical Department shall

10.45 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.46 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.47 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.45 The proposal should be examined in details by the Settlement
Advisory Committee.
10.48 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.46 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.49 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.47 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.48 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.49 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

44
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.15 These guidelines have been framed with a view to provide 1.15 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.16 The compromise should be a negotiated settlement under which 1.16 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the

45
 One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.8 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.8 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

4. Re-payment 4.22 Foregoing of lawyers fees and other legal, incidental charges. 4.8 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.23 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.24 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.26 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.26 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.27 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.27 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.28 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.28 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

46
5. Other issues 5.15 In case of defaults on not adhering to installment deadlines penal 5.15 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.16 Right of forfeiture in case of persistent defaults despite fixation of 5.16 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.15 A Compromise Deed should be documented as per the advice of Legal 6.15 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.16 The Legal Department should ensure that all documents/ securities are 6.16 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.

47
  Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

15) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
16) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if No change
 Unit lying closed for the last 3years. any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :

48

1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
49
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
 Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.50 The borrower should come forward with a detailed settlement proposal 10.50 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.51 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.51 The concerned dealing official from Technical Department shall

10.52 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.53 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.54 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.52 The proposal should be examined in details by the Settlement
Advisory Committee.
10.55 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.53 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.56 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change

50
 10.54 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.55 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.56 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.17 These guidelines have been framed with a view to provide 1.17 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.18 The compromise should be a negotiated settlement under which 1.18 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time

51

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.9 A cut off date for the purposes of compromise should be ascertained. This
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.25 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.26 Foregoing of penal interest/liquidated damages.
4.27 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
52
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.9 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.
4.9 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
 within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.29 As far as possible proposal should provide for recovery of compromise

4.29 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.30 Post Dated Cheques may be obtained for the balance payment and
4.30 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.31 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.31 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.17 In case of defaults on not adhering to installment deadlines penal 5.17 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.18 Right of forfeiture in case of persistent defaults despite fixation of 5.18 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.17 A Compromise Deed should be documented as per the advice of Legal 6.17 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.18 The Legal Department should ensure that all documents/ securities are 6.18 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

53
  The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

17) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
18) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

54
  The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
55
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
 2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.57 The borrower should come forward with a detailed settlement proposal 10.57 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.

56
 10.58 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.58 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.59 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.60 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.61 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.59 The proposal should be examined in details by the Settlement
Advisory Committee.
10.62 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.60 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.63 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.61 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.62 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.63 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.19 These guidelines have been framed with a view to provide 1.19 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.20 The compromise should be a negotiated settlement under which 1.20 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)

57
 No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.10 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.10 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.28 Foregoing of lawyers fees and other legal, incidental charges. 4.10 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.29 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.30 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

58
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

sanction letter (excluding three days from the date of -do-
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS -do-
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and
lower plus 1%.
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.32 As far as possible proposal should provide for recovery of compromise

4.32 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.33 Post Dated Cheques may be obtained for the balance payment and
4.33 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.34 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.34 In case of consortium/co-financing of projects, sharing security on
pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
the terms & conditions of the lead institutions may be followed by THE
LENDER also. followed.

5. Other issues 5.19 In case of defaults on not adhering to installment deadlines penal 5.19 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.20 Right of forfeiture in case of persistent defaults despite fixation of 5.20 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.19 A Compromise Deed should be documented as per the advice of Legal 6.19 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.20 The Legal Department should ensure that all documents/ securities are 6.20 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

59
 7.3 Value of the security available including net worth of the borrowers/
guarantors.
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
7.4 Valuation of assets:-

 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

19) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
20) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change

60
  Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
61
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.64 The borrower should come forward with a detailed settlement proposal 10.64 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at

62
 the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.65 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.65 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.66 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.67 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.68 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.66 The proposal should be examined in details by the Settlement
Advisory Committee.
10.69 Details of One Time Settlement approved by MD shall be submitted to
10.67 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.70 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.68 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.69 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.70 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

63
S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification
o.
1. Aim/Objectives 1.21 These guidelines have been framed with a view to provide 1.21 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.22 The compromise should be a negotiated settlement under which 1.22 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

64
3. Cut-off-Date 3.11 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.11 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.31 Foregoing of lawyers fees and other legal, incidental charges. 4.11 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.32 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.33 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.35 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.35 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.36 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.36 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.37 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.37 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.21 In case of defaults on not adhering to installment deadlines penal 5.21 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.22 Right of forfeiture in case of persistent defaults despite fixation of 5.22 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

65
6. Legal 6.21 A Compromise Deed should be documented as per the advice of Legal 6.21 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.22 The Legal Department should ensure that all documents/ securities are 6.22 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

21) For NPAs over 5years as on the cut- off date

66
 & A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently-
100% of the Principal
22) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
67
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
No change
any two of the following conditions prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3 No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
 2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
CGM(DCCS), Member
CGM(PTS), Member
GM(PMES), Member
DGM(MS)/ (FS), Member
AGM(FS), Convenor
Sr Manager( Law), Member
68
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 Director (Finance) |
 Director(Technical) | (Senior Director will Chair the
Meeting)
 All HODs (Technical/F&A/Legal)
 Internal Auditors
 Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.71 The borrower should come forward with a detailed settlement proposal 10.71 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.72 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.72 The concerned dealing official from Technical Department shall

10.73 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.74 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.75 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.73 The proposal should be examined in details by the Settlement
Advisory Committee.
10.76 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.74 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.77 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.75 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.76 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.77 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.

69
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.23 These guidelines have been framed with a view to provide 1.23 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.24 The compromise should be a negotiated settlement under which 1.24 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the

70
 borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.12 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.34 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.35 Foregoing of penal interest/liquidated damages.
4.36 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.38 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
71
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.12 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.12 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.38 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
 in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.39 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.39 Post Dated Cheques may be obtained for the balance payment and
No change
interest, if any.

4.40 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.40 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.23 In case of defaults on not adhering to installment deadlines penal 5.23 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.24 Right of forfeiture in case of persistent defaults despite fixation of 5.24 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.23 A Compromise Deed should be documented as per the advice of Legal 6.23 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.24 The Legal Department should ensure that all documents/ securities are 6.24 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement
72
could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

23) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
24) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent No change
years
valuer is lower than the loan outstanding/security not created.
No change

73

Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
74
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
 Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.78 The borrower should come forward with a detailed settlement proposal 10.78 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.79 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.79 The concerned dealing official from Technical Department shall

10.80 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change

75
 Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.81 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.82 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.80 The proposal should be examined in details by the Settlement
10.83 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.81 Recommendations of the Settlement Advisory Committee shall be
10.84 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.82 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.83 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.84 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.25 These guidelines have been framed with a view to provide 1.25 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.26 The compromise should be a negotiated settlement under which 1.26 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which

76
 are delayed/ projects abandoned due to the reasons beyond the control of the securities are insufficient to cover the out standings and projects under
borrower. implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to remote.
No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent opportunity cost of delay in early recovery shall also have to be
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the considered For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.13 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.13 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.37 Foregoing of lawyers fees and other legal, incidental charges. 4.13 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.38 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.39 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-

77
 sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing -do-

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and -do-
lower plus 1%.
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.41 As far as possible proposal should provide for recovery of compromise

4.41 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.42 Post Dated Cheques may be obtained for the balance payment and
4.42 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.43 In case where One Time Settlement is considered based on the One Time
4.43 In case of consortium/co-financing of projects, sharing security on For more clarity.
Settlement of other financial institutions sharing security on pari-pasu basis,
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed.
LENDER also.

5. Other issues 5.25 In case of defaults on not adhering to installment deadlines penal 5.25 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.26 Right of forfeiture in case of persistent defaults despite fixation of 5.26 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.25 A Compromise Deed should be documented as per the advice of Legal 6.25 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.26 The Legal Department should ensure that all documents/ securities are 6.26 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

78
 7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.  Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT
Valuation of assets is an
approved Govt. Valuer.
important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

25) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
26) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more

79

B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
D : Settlement amount for specific Sectors :
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
80
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
  For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.85 The borrower should come forward with a detailed settlement proposal 10.85 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a

81
 certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.86 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.86 The concerned dealing official from Technical Department shall

10.87 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.88 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.89 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.87 The proposal should be examined in details by the Settlement
10.90 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.88 Recommendations of the Settlement Advisory Committee shall be
10.91 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.89 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.90 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.91 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.27 These guidelines have been framed with a view to provide 1.27 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the

82
 Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.28 The compromise should be a negotiated settlement under which 1.28 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.14 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.14 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of

83
 which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.40 Foregoing of lawyers fees and other legal, incidental charges. 4.14 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.41 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.42 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.44 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.44 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.45 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.45 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.46 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.46 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.27 In case of defaults on not adhering to installment deadlines penal 5.27 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.28 Right of forfeiture in case of persistent defaults despite fixation of 5.28 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.27 A Compromise Deed should be documented as per the advice of Legal 6.27 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.28 The Legal Department should ensure that all documents/ securities are 6.28 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered

84
 unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

27) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
28) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail

85

 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
86
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-

3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
 For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

87
10. Procedure 10.92 The borrower should come forward with a detailed settlement proposal 10.92 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.93 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.93 The concerned dealing official from Technical Department shall

10.94 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.95 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.96 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.94 The proposal should be examined in details by the Settlement
Advisory Committee.
10.97 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.95 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.98 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.96 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.97 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.98 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

88
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.29 These guidelines have been framed with a view to provide 1.29 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.30 The compromise should be a negotiated settlement under which 1.30 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred

89

2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.15 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.15 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.43 Foregoing of lawyers fees and other legal, incidental charges. 4.15 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.44 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.45 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.47 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.47 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.48 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.48 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.49 In case where One Time Settlement is considered based on the One Time

90
 Settlement of other financial institutions sharing security on pari-pasu basis, 4.49 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.29 In case of defaults on not adhering to installment deadlines penal 5.29 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.30 Right of forfeiture in case of persistent defaults despite fixation of 5.30 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.29 A Compromise Deed should be documented as per the advice of Legal 6.29 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.30 The Legal Department should ensure that all documents/ securities are 6.30 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.

91
  Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

29) For NPAs over 5years as on the cut- off date A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal &
Where the financial position of the company has not improved
subsequently-100% of the Principal
30) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 Suits pending for the last 3 years.

 The company has never achieved cash break even

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.

B : Settlement amount : Amount below principal : 100% of the Principal outstanding.

1) For NPAs over 5 years as on the cut off date and, if any two of the following B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years following condition prevail:
 Suits pending for more than 5 years  Unit lying closed for more than 5years

 Suits pending for more than 5 years

 The company has never achieved cash break even

 The company has remained unimplemented for more than 3 years  The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent years No change
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created.
already provided for/ written off in the books of THE LENDER) No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change

92

C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
D : Settlement amount for specific Sectors :
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
93
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
 to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.99 The borrower should come forward with a detailed settlement proposal 10.99 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.100 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.100 The concerned dealing official from Technical Department shall

10.101 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.102 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.103 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.101 The proposal should be examined in details by the Settlement
Advisory Committee.
10.104 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.102 Recommendations of the Settlement Advisory Committee shall be

94
 placed before MD CMD for consideration and approval.
10.105 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.103 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.104 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.105 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.31 These guidelines have been framed with a view to provide 1.31 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.32 The compromise should be a negotiated settlement under which 1.32 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or

95

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.16 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.16 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.46 Foregoing of lawyers fees and other legal, incidental charges. 4.16 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.47 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.48 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

96
 Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.50 As far as possible proposal should provide for recovery of compromise

4.50 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.51 Post Dated Cheques may be obtained for the balance payment and
4.51 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.52 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.52 In case of consortium/co-financing of projects, sharing security on
For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.31 In case of defaults on not adhering to installment deadlines penal 5.31 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.32 Right of forfeiture in case of persistent defaults despite fixation of 5.32 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.31 A Compromise Deed should be documented as per the advice of Legal 6.31 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.32 The Legal Department should ensure that all documents/ securities are 6.32 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

97
 valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

31) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
32) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

98
  The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
99
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
  For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.106 The borrower should come forward with a detailed settlement proposal 10.106 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS

100
 amount proposed.
 Status of operation of the plant – Operational or
10.107 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.107 The concerned dealing official from Technical Department shall

10.108 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.109 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.110 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.108 The proposal should be examined in details by the Settlement
10.111 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.109 Recommendations of the Settlement Advisory Committee shall be
10.112 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.110 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.111 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.112 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.33 These guidelines have been framed with a view to provide 1.33 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.34 The compromise should be a negotiated settlement under which 1.34 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.

101
 Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.17 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.17 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.49 Foregoing of lawyers fees and other legal, incidental charges. 4.17 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.50 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

102
 4.51 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c). to the P & L A/c).
No change
4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount
deserving cases. which shall be charged as follows :
Modified to have more clarity
 No interest – if OTS amount is paid within 60 days from the date of
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter) -do-

 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
 Simple interest @ prevailing sector rate on reducing
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days. -do-
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment.
-do-
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days
from the date of dispatch of the sanction letter).
No change

4.53 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.53 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above No change

4.54 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.54 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
No change
4.55 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.55 In case of consortium/co-financing of projects, sharing security on
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed. For more clarity.

5. Other issues 5.33 In case of defaults on not adhering to installment deadlines penal 5.33 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.34 Right of forfeiture in case of persistent defaults despite fixation of 5.34 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.33 A Compromise Deed should be documented as per the advice of Legal 6.33 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.34 The Legal Department should ensure that all documents/ securities are 6.34 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change

103
 amount 7.2 If in operation, financial performance in the last three years.
No change
7.2 If in operation, financial performance in the last three years.

7.3 Value of the security available including net worth of the borrowers/
guarantors. No change
7.3 Value of the security available including net worth of the borrowers/
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
7.4 Valuation of assets:-
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

33) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
34) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

104

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
105
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
 applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.113 The borrower should come forward with a detailed settlement proposal 10.113 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

106
  Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.114 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.114 The concerned dealing official from Technical Department shall

10.115 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.116 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.117 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.115 The proposal should be examined in details by the Settlement
10.118 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.116 Recommendations of the Settlement Advisory Committee shall be
10.119 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.117 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.118 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.119 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

107
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.35 These guidelines have been framed with a view to provide 1.35 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.36 The compromise should be a negotiated settlement under which 1.36 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

108
3. Cut-off-Date 3.18 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.18 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.52 Foregoing of lawyers fees and other legal, incidental charges. 4.18 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.53 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.54 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.56 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.56 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.57 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.57 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.58 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.58 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.35 In case of defaults on not adhering to installment deadlines penal 5.35 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

109
 5.36 Right of forfeiture in case of persistent defaults despite fixation of 5.36 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.35 A Compromise Deed should be documented as per the advice of Legal 6.35 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.36 The Legal Department should ensure that all documents/ securities are 6.36 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

110
A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

35) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
36) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever

111
 is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
CGM(DCCS), Member
CGM(PTS), Member
112
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 Director (Finance) |
 Director(Technical) | (Senior Director will Chair the
 GM(PMES), Member Meeting)
DGM(MS)/ (FS), Member  All HODs (Technical/F&A/Legal)
AGM(FS), Convenor  Internal Auditors
Sr Manager( Law), Member  Legal Auditors
Internal Auditor, Member  Recovery Head, Convener.
Legal Auditor, Member

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.120 The borrower should come forward with a detailed settlement proposal 10.120 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.121 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.121 The concerned dealing official from Technical Department shall

10.122 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.123 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.124 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.122 The proposal should be examined in details by the Settlement
Advisory Committee.
10.125 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.123 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.126 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.124 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.125 Details of One Time Settlement approved by MD CMD shall be

113
 submitted to the Board for information.
10.126 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.37 These guidelines have been framed with a view to provide 1.37 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.38 The compromise should be a negotiated settlement under which 1.38 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural

114

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.19 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.55 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.56 Foregoing of penal interest/liquidated damages.
4.57 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
115
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.19 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.19 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
 4.59 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.59 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
the state of affairs of the borrower and subject to payment of interest No change
indicated in para 4.4 above

4.60 Post Dated Cheques may be obtained for the balance payment and 4.60 Post Dated Cheques may be obtained for the balance payment and
interest, if any. interest, if any. No change

4.61 In case where One Time Settlement is considered based on the One Time 4.61 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis, pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
the terms & conditions of the lead institutions may be followed by THE followed.
LENDER also.

5. Other issues 5.37 In case of defaults on not adhering to installment deadlines penal 5.37 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.38 Right of forfeiture in case of persistent defaults despite fixation of 5.38 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.37 A Compromise Deed should be documented as per the advice of Legal 6.37 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.38 The Legal Department should ensure that all documents/ securities are 6.38 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

116
 submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

37) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
38) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

117
  Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
118
 The company project has remained unimplemented for more than 3
years
No change
 Realizable value of the mortgaged assets as assessed by No change
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
 Action initiated under SARFAESI Act and is pending for 3 No change
years.
Amount below the principal outstanding(maximum to the extent of the No change
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date- No change
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at Deleted as no project in the
document rate or at present lending rate, whichever is lower. portfolio.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
 Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.127 The borrower should come forward with a detailed settlement proposal 10.127 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.128 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

119
 10.128 The concerned dealing official from Technical Department shall
10.129 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.130 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.131 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.129 The proposal should be examined in details by the Settlement
Advisory Committee.
10.132 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.130 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.133 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.131 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.132 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.133 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.39 These guidelines have been framed with a view to provide 1.39 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.40 The compromise should be a negotiated settlement under which 1.40 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

120
 (c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.20 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.20 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.58 Foregoing of lawyers fees and other legal, incidental charges. 4.20 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.59 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.60 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity

121
 deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

-do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing
-do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.62 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.62 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.63 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.63 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.64 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.64 In case of consortium/co-financing of projects, sharing security on
For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.39 In case of defaults on not adhering to installment deadlines penal 5.39 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.40 Right of forfeiture in case of persistent defaults despite fixation of 5.40 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.39 A Compromise Deed should be documented as per the advice of Legal 6.39 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.40 The Legal Department should ensure that all documents/ securities are 6.40 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

122
 7.4 Valuation of assets:-
7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT
important criteria for deciding the
approved Govt. Valuer.
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

39) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
40) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not

123

100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
124
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
 LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower. Settlement amount may be arrived at as follows:-

 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.134 The borrower should come forward with a detailed settlement proposal 10.134 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where

125
 balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.135 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.135 The concerned dealing official from Technical Department shall

10.136 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.137 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.138 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.136 The proposal should be examined in details by the Settlement
10.139 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.137 Recommendations of the Settlement Advisory Committee shall be
10.140 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.138 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.139 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.140 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

126
 o.
1. Aim/Objectives 1.41 These guidelines have been framed with a view to provide 1.41 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.42 The compromise should be a negotiated settlement under which 1.42 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.21 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

127
 NPA Date 3.21 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.61 Foregoing of lawyers fees and other legal, incidental charges. 4.21 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.62 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.63 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.65 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.65 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.66 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.66 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.67 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.67 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.41 In case of defaults on not adhering to installment deadlines penal 5.41 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.42 Right of forfeiture in case of persistent defaults despite fixation of 5.42 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.41 A Compromise Deed should be documented as per the advice of Legal 6.41 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

128
 6.42 The Legal Department should ensure that all documents/ securities are 6.42 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

41) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&

129

42) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
130
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower.
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

131
 (The decision of SAC shall be put up to the CMD)

10. Procedure 10.141 The borrower should come forward with a detailed settlement proposal 10.141 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.142 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.142 The concerned dealing official from Technical Department shall

10.143 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.144 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.145 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.143 The proposal should be examined in details by the Settlement
Advisory Committee.
10.146 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.144 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.147 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.145 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.146 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.147 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

132
 11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.43 These guidelines have been framed with a view to provide 1.43 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.44 The compromise should be a negotiated settlement under which 1.44 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood

133
 of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.22 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.22 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.64 Foregoing of lawyers fees and other legal, incidental charges. 4.22 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.65 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.66 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.68 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.68 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.69 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.69 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

134
 4.70 In case where One Time Settlement is considered based on the One Time
4.70 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis, For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed.
LENDER also.

5. Other issues 5.43 In case of defaults on not adhering to installment deadlines penal 5.43 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.44 Right of forfeiture in case of persistent defaults despite fixation of 5.44 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.43 A Compromise Deed should be documented as per the advice of Legal 6.43 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.44 The Legal Department should ensure that all documents/ securities are 6.44 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after

135

A : Settlement amount : 100% Principal outstanding
43) For NPAs over 5years as on the cut- off date
&
Where the financial position of the company has not improved subsequently-
100% of the Principal
44) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
136
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.
However, the following broad guidelines shall be followed :
A : Settlement amount : 100% Principal outstanding
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change

C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
137
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
 alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.148 The borrower should come forward with a detailed settlement proposal 10.148 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.149 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.149 The concerned dealing official from Technical Department shall

10.150 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.151 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.152 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.

138
 10.150 The proposal should be examined in details by the Settlement
10.153 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.151 Recommendations of the Settlement Advisory Committee shall be
10.154 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
No change
10.152 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.153 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.154 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.45 These guidelines have been framed with a view to provide 1.45 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.46 The compromise should be a negotiated settlement under which 1.46 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to

139
 revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered.
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
considered
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.23 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.23 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.67 Foregoing of lawyers fees and other legal, incidental charges. 4.23 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.68 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.69 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

140
  beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
-do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory.

Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.71 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.71 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.72 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.72 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.73 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.73 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.45 In case of defaults on not adhering to installment deadlines penal 5.45 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.46 Right of forfeiture in case of persistent defaults despite fixation of 5.46 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.45 A Compromise Deed should be documented as per the advice of Legal 6.45 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.46 The Legal Department should ensure that all documents/ securities are 6.46 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of

141
 secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

45) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
46) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the

142
  Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
143
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.155 The borrower should come forward with a detailed settlement proposal 10.155 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.

144
  The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.156 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.156 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.157 This proposal should be examined in details by the Settlement Advisory No change
Convener of SAC alongwith the detailed background note
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.158 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.159 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.157 The proposal should be examined in details by the Settlement
Advisory Committee.
10.160 Details of One Time Settlement approved by MD shall be submitted to
10.158 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.161 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.159 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.160 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.161 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.47 These guidelines have been framed with a view to provide 1.47 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.48 The compromise should be a negotiated settlement under which 1.48 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

145
2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.24 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.24 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.70 Foregoing of lawyers fees and other legal, incidental charges. 4.24 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.71 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

146
 4.72 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing -do-

 beyond 60 days upto 240 days at present lending rate on simple interest
balance basis from the date of sanction letter , if OTS
basis from the date of sanction.
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
-do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.74 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.74 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.75 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.75 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.76 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.76 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.47 In case of defaults on not adhering to installment deadlines penal 5.47 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.48 Right of forfeiture in case of persistent defaults despite fixation of 5.48 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.47 A Compromise Deed should be documented as per the advice of Legal 6.47 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.48 The Legal Department should ensure that all documents/ securities are 6.48 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at

147
 compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount 7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/
guarantors. No change
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

47) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
48) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

148
  Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
149
 The company project has never achieved cash break even No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3 No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
No change
 In case security is not created.
 Action initiated under SARFAESI Act and is pending for 3
No change
years.
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
 D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at than Grid connected)/MSW and SPV which is not being financed by THE
document rate or at present lending rate, whichever is lower. LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
 For NPAs between 2-5 years old-100% of the Principal. Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
 For NPAs over 8 years old-50% ot the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.162 The borrower should come forward with a detailed settlement proposal 10.162 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

150
  The valuation of mortgaged assets.
 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.163 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.163 The concerned dealing official from Technical Department shall

10.164 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.165 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.166 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.164 The proposal should be examined in details by the Settlement
10.167 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.165 Recommendations of the Settlement Advisory Committee shall be
10.168 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.166 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.167 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.168 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

151
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.49 These guidelines have been framed with a view to provide 1.49 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.50 The compromise should be a negotiated settlement under which 1.50 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

152
 Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.25 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.25 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.73 Foregoing of lawyers fees and other legal, incidental charges. 4.25 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.74 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.75 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.77 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.77 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.78 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.78 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.79 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.79 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.49 In case of defaults on not adhering to installment deadlines penal 5.49 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is

153
 interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.50 Right of forfeiture in case of persistent defaults despite fixation of 5.50 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.49 A Compromise Deed should be documented as per the advice of Legal 6.49 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.50 The Legal Department should ensure that all documents/ securities are 6.50 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

154
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

49) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
50) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

155

100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
156
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.169 The borrower should come forward with a detailed settlement proposal 10.169 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.170 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.170 The concerned dealing official from Technical Department shall

10.171 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.172 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.173 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.171 The proposal should be examined in details by the Settlement
Advisory Committee.
10.174 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.172 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.175 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.173 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

157
 10.174 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.175 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.51 These guidelines have been framed with a view to provide 1.51 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.52 The compromise should be a negotiated settlement under which 1.52 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower

158

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.26 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.76 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.77 Foregoing of penal interest/liquidated damages.
4.78 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
159
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.26 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.26 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
 4.80 As far as possible proposal should provide for recovery of compromise
4.80 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.81 Post Dated Cheques may be obtained for the balance payment and
4.81 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.82 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.82 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.51 In case of defaults on not adhering to installment deadlines penal 5.51 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.52 Right of forfeiture in case of persistent defaults despite fixation of 5.52 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.51 A Compromise Deed should be documented as per the advice of Legal 6.51 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.52 The Legal Department should ensure that all documents/ securities are 6.52 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

160
  The inspection of the secured assets shall be carried out before
submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

51) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
52) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

161

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
162
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
 third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.176 The borrower should come forward with a detailed settlement proposal 10.176 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.177 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

163
 10.177 The concerned dealing official from Technical Department shall
10.178 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note No change
(covering proposal of the borrower, eligibility as per THE
10.179 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.180 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.178 The proposal should be examined in details by the Settlement
10.181 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.179 Recommendations of the Settlement Advisory Committee shall be
10.182 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.180 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.181 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.182 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.53 These guidelines have been framed with a view to provide 1.53 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.54 The compromise should be a negotiated settlement under which 1.54 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change

164
 And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.27 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.27 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.79 Foregoing of lawyers fees and other legal, incidental charges. 4.27 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.80 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.81 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

165
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

-do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing
-do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.83 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.83 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.84 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.84 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.85 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.85 In case of consortium/co-financing of projects, sharing security on
For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.53 In case of defaults on not adhering to installment deadlines penal 5.53 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.54 Right of forfeiture in case of persistent defaults despite fixation of 5.54 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.53 A Compromise Deed should be documented as per the advice of Legal 6.53 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.54 The Legal Department should ensure that all documents/ securities are 6.54 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/

166
 guarantors. 7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more 7.4 Valuation of assets:-
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT
important criteria for deciding the
approved Govt. Valuer.
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

53) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
54) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

167

100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
168
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-

 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.183 The borrower should come forward with a detailed settlement proposal 10.183 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,

169
 if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.184 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.184 The concerned dealing official from Technical Department shall

10.185 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.186 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.187 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.185 The proposal should be examined in details by the Settlement
10.188 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.186 Recommendations of the Settlement Advisory Committee shall be
10.189 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.187 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.188 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.189 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

170
S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification
o.
1. Aim/Objectives 1.55 These guidelines have been framed with a view to provide 1.55 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.56 The compromise should be a negotiated settlement under which 1.56 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.28 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this

171
 This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.28 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.82 Foregoing of lawyers fees and other legal, incidental charges. 4.28 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.83 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.84 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.86 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.86 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.87 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.87 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.88 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.88 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.55 In case of defaults on not adhering to installment deadlines penal 5.55 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.56 Right of forfeiture in case of persistent defaults despite fixation of 5.56 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

172
6. Legal 6.55 A Compromise Deed should be documented as per the advice of Legal 6.55 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.56 The Legal Department should ensure that all documents/ securities are 6.56 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

55) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&

173
 Where the financial position of the company has not improved subsequently-
100% of the Principal
56) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
174
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
 2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors

175
 Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.190 The borrower should come forward with a detailed settlement proposal 10.190 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.191 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.191 The concerned dealing official from Technical Department shall

10.192 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.193 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.194 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.192 The proposal should be examined in details by the Settlement
Advisory Committee.
10.195 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.193 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.196 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.194 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.195 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.196 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific

176
 these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.57 These guidelines have been framed with a view to provide 1.57 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.58 The compromise should be a negotiated settlement under which 1.58 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are

177

2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.29 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.85 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.86 Foregoing of penal interest/liquidated damages.
4.87 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.89 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
178
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.29 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.29 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.89 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
 4.90 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.90 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
No change

4.91 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.91 In case of consortium/co-financing of projects, sharing security on
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
LENDER also. followed.

5. Other issues 5.57 In case of defaults on not adhering to installment deadlines penal 5.57 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.58 Right of forfeiture in case of persistent defaults despite fixation of 5.58 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.57 A Compromise Deed should be documented as per the advice of Legal 6.57 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.58 The Legal Department should ensure that all documents/ securities are 6.58 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

179
  Value of securities (saleable/realizable value of physical
assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

57) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
58) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent No change
years
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan

180

Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
181
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
 Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.197 The borrower should come forward with a detailed settlement proposal 10.197 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.198 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.198 The concerned dealing official from Technical Department shall

10.199 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE

182
 10.200 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.201 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.199 The proposal should be examined in details by the Settlement
10.202 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.200 Recommendations of the Settlement Advisory Committee shall be
10.203 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.201 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.202 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.203 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.59 These guidelines have been framed with a view to provide 1.59 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.60 The compromise should be a negotiated settlement under which 1.60 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of
realization of security appear bleak, the primary/collateral securities are
insufficient to cover the out standings and projects under implementation which
are delayed/ projects abandoned due to the reasons beyond the control of the
borrower.
(c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable No change
chances of realization of security appear bleak, the primary/collateral
securities are insufficient to cover the out standings and projects under
implementation which are delayed/ projects abandoned due to the reasons

183
 beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to remote.
No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent opportunity cost of delay in early recovery shall also have to be
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the considered For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.30 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.30 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.88 Foregoing of lawyers fees and other legal, incidental charges. 4.30 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.89 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.90 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

184

 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
 Simple interest @ prevailing sector rate on reducing
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days. -do-
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment.
-do-
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days
from the date of dispatch of the sanction letter).
No change

4.92 As far as possible proposal should provide for recovery of compromise

4.92 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above No change

4.93 Post Dated Cheques may be obtained for the balance payment and
4.93 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any.
No change
4.94 In case where One Time Settlement is considered based on the One Time
4.94 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis,
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed. For more clarity.
LENDER also.

5. Other issues 5.59 In case of defaults on not adhering to installment deadlines penal 5.59 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.60 Right of forfeiture in case of persistent defaults despite fixation of 5.60 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.59 A Compromise Deed should be documented as per the advice of Legal 6.59 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.60 The Legal Department should ensure that all documents/ securities are 6.60 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The

185
 borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

59) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
60) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.

186
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
187
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.204 The borrower should come forward with a detailed settlement proposal 10.204 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since

188
 commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.205 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.205 The concerned dealing official from Technical Department shall

10.206 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE No change
10.207 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.208 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.206 The proposal should be examined in details by the Settlement
10.209 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.207 Recommendations of the Settlement Advisory Committee shall be
10.210 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.208 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy. No change

10.209 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.210 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.61 These guidelines have been framed with a view to provide 1.61 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.62 The compromise should be a negotiated settlement under which 1.62 The compromise should be a negotiated settlement under
No change

189
 THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.31 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.31 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

190
4. Re-payment 4.91 Foregoing of lawyers fees and other legal, incidental charges. 4.31 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.92 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.93 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.95 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.95 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.96 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.96 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.97 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.97 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.61 In case of defaults on not adhering to installment deadlines penal 5.61 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.62 Right of forfeiture in case of persistent defaults despite fixation of 5.62 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.61 A Compromise Deed should be documented as per the advice of Legal 6.61 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.62 The Legal Department should ensure that all documents/ securities are 6.62 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

191
7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

61) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
62) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

192
  Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
193
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.211 The borrower should come forward with a detailed settlement proposal 10.211 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

194
 Alongwith application, the borrower shall provide the following
documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.212 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.212 The concerned dealing official from Technical Department shall

10.213 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.214 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.215 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.213 The proposal should be examined in details by the Settlement
Advisory Committee.
10.216 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.214 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.217 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.215 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.216 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.217 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

195
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.63 These guidelines have been framed with a view to provide 1.63 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.64 The compromise should be a negotiated settlement under which 1.64 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the

196
 One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.32 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.32 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.94 Foregoing of lawyers fees and other legal, incidental charges. 4.32 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.95 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.96 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.98 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.98 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.99 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.99 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.100 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.100 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

197
5. Other issues 5.63 In case of defaults on not adhering to installment deadlines penal 5.63 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.64 Right of forfeiture in case of persistent defaults despite fixation of 5.64 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.63 A Compromise Deed should be documented as per the advice of Legal 6.63 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.64 The Legal Department should ensure that all documents/ securities are 6.64 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.

198
  Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

63) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
64) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if No change
 Unit lying closed for the last 3years. any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :

199

1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
200
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
 Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.218 The borrower should come forward with a detailed settlement proposal 10.218 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.219 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.219 The concerned dealing official from Technical Department shall

10.220 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.221 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.222 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.220 The proposal should be examined in details by the Settlement
Advisory Committee.
10.223 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.221 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.224 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change

201
 10.222 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.223 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.224 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.65 These guidelines have been framed with a view to provide 1.65 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.66 The compromise should be a negotiated settlement under which 1.66 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time

202

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.33 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.97 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.98 Foregoing of penal interest/liquidated damages.
4.99 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
203
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.33 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.33 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
 within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.101 As far as possible proposal should provide for recovery of compromise

4.101 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.102 Post Dated Cheques may be obtained for the balance payment and
4.102 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.103 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.103 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.65 In case of defaults on not adhering to installment deadlines penal 5.65 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.66 Right of forfeiture in case of persistent defaults despite fixation of 5.66 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.65 A Compromise Deed should be documented as per the advice of Legal 6.65 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.66 The Legal Department should ensure that all documents/ securities are 6.66 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

204
  The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

65) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
66) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

205
  The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
206
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
 2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.225 The borrower should come forward with a detailed settlement proposal 10.225 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.

207
 10.226 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.226 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.227 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.228 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.229 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.227 The proposal should be examined in details by the Settlement
Advisory Committee.
10.230 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.228 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.231 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.229 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.230 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.231 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.67 These guidelines have been framed with a view to provide 1.67 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.68 The compromise should be a negotiated settlement under which 1.68 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)

208
 No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.34 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.34 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.100 Foregoing of lawyers fees and other legal, incidental charges. 4.34 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.101 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.102 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

209
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

sanction letter (excluding three days from the date of -do-
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS -do-
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and
lower plus 1%.
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.104 As far as possible proposal should provide for recovery of compromise

4.104 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.105 Post Dated Cheques may be obtained for the balance payment and
4.105 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.106 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.106 In case of consortium/co-financing of projects, sharing security on
pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
followed.

5. Other issues 5.67 In case of defaults on not adhering to installment deadlines penal 5.67 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.68 Right of forfeiture in case of persistent defaults despite fixation of 5.68 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.67 A Compromise Deed should be documented as per the advice of Legal 6.67 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.68 The Legal Department should ensure that all documents/ securities are 6.68 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

210
 7.3 Value of the security available including net worth of the borrowers/
guarantors.
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
7.4 Valuation of assets:-

 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

67) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
68) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change

211
  Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
212
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.232 The borrower should come forward with a detailed settlement proposal 10.232 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at

213
 the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.233 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.233 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.234 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.235 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.236 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.234 The proposal should be examined in details by the Settlement
Advisory Committee.
10.237 Details of One Time Settlement approved by MD shall be submitted to
10.235 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.238 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.236 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.237 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.238 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

214
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.69 These guidelines have been framed with a view to provide 1.69 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.70 The compromise should be a negotiated settlement under which 1.70 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

215
 Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.35 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.35 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.103 Foregoing of lawyers fees and other legal, incidental charges. 4.35 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.104 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.105 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.107 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.107 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.108 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.108 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.109 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.109 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.69 In case of defaults on not adhering to installment deadlines penal 5.69 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is

216
 interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.70 Right of forfeiture in case of persistent defaults despite fixation of 5.70 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.69 A Compromise Deed should be documented as per the advice of Legal 6.69 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.70 The Legal Department should ensure that all documents/ securities are 6.70 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

217
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

69) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
70) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

218

100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
219
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.239 The borrower should come forward with a detailed settlement proposal 10.239 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.240 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.240 The concerned dealing official from Technical Department shall

10.241 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.242 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.243 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.241 The proposal should be examined in details by the Settlement
Advisory Committee.
10.244 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.242 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.245 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.243 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

220
 10.244 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.245 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

221
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.71 These guidelines have been framed with a view to provide 1.71 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.72 The compromise should be a negotiated settlement under which 1.72 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

222
 Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.36 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.36 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.106 Foregoing of lawyers fees and other legal, incidental charges. 4.36 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.107 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.108 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.110 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.110 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.111 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.111 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.112 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.112 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.71 In case of defaults on not adhering to installment deadlines penal 5.71 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is

223
 interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.72 Right of forfeiture in case of persistent defaults despite fixation of 5.72 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.71 A Compromise Deed should be documented as per the advice of Legal 6.71 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.72 The Legal Department should ensure that all documents/ securities are 6.72 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

224
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

71) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
72) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

225

100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
226
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.246 The borrower should come forward with a detailed settlement proposal 10.246 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.247 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.247 The concerned dealing official from Technical Department shall

10.248 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.249 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.250 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.248 The proposal should be examined in details by the Settlement
Advisory Committee.
10.251 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.249 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.252 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.250 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

227
 10.251 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.252 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.73 These guidelines have been framed with a view to provide 1.73 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.74 The compromise should be a negotiated settlement under which 1.74 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower

228

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.37 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.109 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.110 Foregoing of penal interest/liquidated damages.
4.111 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
229
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.37 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.37 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
 4.113 As far as possible proposal should provide for recovery of compromise
4.113 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.114 Post Dated Cheques may be obtained for the balance payment and
4.114 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.115 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.115 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.73 In case of defaults on not adhering to installment deadlines penal 5.73 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.74 Right of forfeiture in case of persistent defaults despite fixation of 5.74 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.73 A Compromise Deed should be documented as per the advice of Legal 6.73 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.74 The Legal Department should ensure that all documents/ securities are 6.74 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

230
  The inspection of the secured assets shall be carried out before
submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

73) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
74) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

231

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
232
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
 third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.253 The borrower should come forward with a detailed settlement proposal 10.253 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.254 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

233
 10.254 The concerned dealing official from Technical Department shall
10.255 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note No change
(covering proposal of the borrower, eligibility as per THE
10.256 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.257 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.255 The proposal should be examined in details by the Settlement
10.258 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.256 Recommendations of the Settlement Advisory Committee shall be
10.259 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.257 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.258 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.259 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.75 These guidelines have been framed with a view to provide 1.75 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.76 The compromise should be a negotiated settlement under which 1.76 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)

234
 No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.38 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.38 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.112 Foregoing of lawyers fees and other legal, incidental charges. 4.38 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.113 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.114 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

235
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

sanction letter (excluding three days from the date of -do-
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS -do-
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and
lower plus 1%.
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.116 As far as possible proposal should provide for recovery of compromise

4.116 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.117 Post Dated Cheques may be obtained for the balance payment and
4.117 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.118 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.118 In case of consortium/co-financing of projects, sharing security on
pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
followed.

5. Other issues 5.75 In case of defaults on not adhering to installment deadlines penal 5.75 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.76 Right of forfeiture in case of persistent defaults despite fixation of 5.76 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.75 A Compromise Deed should be documented as per the advice of Legal 6.75 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.76 The Legal Department should ensure that all documents/ securities are 6.76 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

236
 7.3 Value of the security available including net worth of the borrowers/
guarantors.
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
7.4 Valuation of assets:-

 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

75) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
76) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change

237
  Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
238
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.260 The borrower should come forward with a detailed settlement proposal 10.260 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at

239
 the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.261 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.261 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.262 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.263 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.264 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.262 The proposal should be examined in details by the Settlement
Advisory Committee.
10.265 Details of One Time Settlement approved by MD shall be submitted to
10.263 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.266 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.264 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.265 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.266 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

240
S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification
o.
1. Aim/Objectives 1.77 These guidelines have been framed with a view to provide 1.77 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.78 The compromise should be a negotiated settlement under which 1.78 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

241
3. Cut-off-Date 3.39 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.39 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.115 Foregoing of lawyers fees and other legal, incidental charges. 4.39 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.116 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.117 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.119 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.119 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.120 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.120 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.121 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.121 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.77 In case of defaults on not adhering to installment deadlines penal 5.77 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.78 Right of forfeiture in case of persistent defaults despite fixation of 5.78 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change

242
 condition. condition.

6. Legal 6.77 A Compromise Deed should be documented as per the advice of Legal 6.77 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.78 The Legal Department should ensure that all documents/ securities are 6.78 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

243
77) For NPAs over 5years as on the cut- off date
& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently-
100% of the Principal
78) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
244
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
No change
any two of the following conditions prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3 No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :

2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial D : Settlement amount for specific Sectors :
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
CGM(DCCS), Member
CGM(PTS), Member
GM(PMES), Member
DGM(MS)/ (FS), Member
AGM(FS), Convenor
245
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 Director (Finance) |
 Director(Technical) | (Senior Director will Chair the
Meeting)
 All HODs (Technical/F&A/Legal)
 Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.267 The borrower should come forward with a detailed settlement proposal 10.267 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.268 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.268 The concerned dealing official from Technical Department shall

10.269 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.270 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.271 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.269 The proposal should be examined in details by the Settlement
Advisory Committee.
10.272 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.270 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.273 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.271 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.272 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.273 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.

246
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

247
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.79 These guidelines have been framed with a view to provide 1.79 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.80 The compromise should be a negotiated settlement under which 1.80 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

248
 Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.40 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.40 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.118 Foregoing of lawyers fees and other legal, incidental charges. 4.40 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.119 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.120 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.122 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.122 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.123 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.123 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.124 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.124 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.79 In case of defaults on not adhering to installment deadlines penal 5.79 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is

249
 interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.80 Right of forfeiture in case of persistent defaults despite fixation of 5.80 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.79 A Compromise Deed should be documented as per the advice of Legal 6.79 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.80 The Legal Department should ensure that all documents/ securities are 6.80 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

250
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

79) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
80) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

251

100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
252
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.274 The borrower should come forward with a detailed settlement proposal 10.274 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.275 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.275 The concerned dealing official from Technical Department shall

10.276 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.277 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.278 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.276 The proposal should be examined in details by the Settlement
Advisory Committee.
10.279 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.277 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.280 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.278 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

253
 10.279 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.280 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.81 These guidelines have been framed with a view to provide 1.81 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.82 The compromise should be a negotiated settlement under which 1.82 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower

254

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.41 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.121 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.122 Foregoing of penal interest/liquidated damages.
4.123 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
255
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.41 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.41 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
 4.125 As far as possible proposal should provide for recovery of compromise
4.125 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.126 Post Dated Cheques may be obtained for the balance payment and
4.126 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.127 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.127 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.81 In case of defaults on not adhering to installment deadlines penal 5.81 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.82 Right of forfeiture in case of persistent defaults despite fixation of 5.82 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.81 A Compromise Deed should be documented as per the advice of Legal 6.81 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.82 The Legal Department should ensure that all documents/ securities are 6.82 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

256
  The inspection of the secured assets shall be carried out before
submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

81) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
82) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

257

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
258
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
 third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.281 The borrower should come forward with a detailed settlement proposal 10.281 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.282 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

259
 10.282 The concerned dealing official from Technical Department shall
10.283 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note No change
(covering proposal of the borrower, eligibility as per THE
10.284 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.285 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.283 The proposal should be examined in details by the Settlement
10.286 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.284 Recommendations of the Settlement Advisory Committee shall be
10.287 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.285 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.286 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.287 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.83 These guidelines have been framed with a view to provide 1.83 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.84 The compromise should be a negotiated settlement under which 1.84 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change

260
 And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.42 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.42 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.124 Foregoing of lawyers fees and other legal, incidental charges. 4.42 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.125 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.126 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

261
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

-do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing
-do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.128 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.128 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.129 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.129 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.130 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.130 In case of consortium/co-financing of projects, sharing security on
For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
followed.

5. Other issues 5.83 In case of defaults on not adhering to installment deadlines penal 5.83 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.84 Right of forfeiture in case of persistent defaults despite fixation of 5.84 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.83 A Compromise Deed should be documented as per the advice of Legal 6.83 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.84 The Legal Department should ensure that all documents/ securities are 6.84 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/

262
 guarantors. 7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more 7.4 Valuation of assets:-
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT
important criteria for deciding the
approved Govt. Valuer.
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

83) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
84) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

263

100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
264
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-

 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.288 The borrower should come forward with a detailed settlement proposal 10.288 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,

265
 if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.289 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.289 The concerned dealing official from Technical Department shall

10.290 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.291 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.292 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.290 The proposal should be examined in details by the Settlement
10.293 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.291 Recommendations of the Settlement Advisory Committee shall be
10.294 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.292 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.293 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.294 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

266
S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification
o.
1. Aim/Objectives 1.85 These guidelines have been framed with a view to provide 1.85 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.86 The compromise should be a negotiated settlement under which 1.86 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.43 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this

267
 This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.43 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.127 Foregoing of lawyers fees and other legal, incidental charges. 4.43 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.128 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.129 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.131 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.131 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.132 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.132 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.133 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.133 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.85 In case of defaults on not adhering to installment deadlines penal 5.85 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.86 Right of forfeiture in case of persistent defaults despite fixation of 5.86 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

268
6. Legal 6.85 A Compromise Deed should be documented as per the advice of Legal 6.85 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.86 The Legal Department should ensure that all documents/ securities are 6.86 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

85) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&

269
 Where the financial position of the company has not improved subsequently-
100% of the Principal
86) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
270
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
 2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors

271
 Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.295 The borrower should come forward with a detailed settlement proposal 10.295 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.296 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.296 The concerned dealing official from Technical Department shall

10.297 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.298 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.299 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.297 The proposal should be examined in details by the Settlement
Advisory Committee.
10.300 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.298 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.301 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.299 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.300 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.301 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific

272
 these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.87 These guidelines have been framed with a view to provide 1.87 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.88 The compromise should be a negotiated settlement under which 1.88 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are

273

2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.44 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.130 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.131 Foregoing of penal interest/liquidated damages.
4.132 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.134 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
274
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.44 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.44 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.134 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
 4.135 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.135 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
No change

4.136 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.136 In case of consortium/co-financing of projects, sharing security on
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
LENDER also. followed.

5. Other issues 5.87 In case of defaults on not adhering to installment deadlines penal 5.87 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.88 Right of forfeiture in case of persistent defaults despite fixation of 5.88 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.87 A Compromise Deed should be documented as per the advice of Legal 6.87 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.88 The Legal Department should ensure that all documents/ securities are 6.88 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

275
  Value of securities (saleable/realizable value of physical
assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

87) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
88) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent No change
years
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan

276

Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
277
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
 Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.302 The borrower should come forward with a detailed settlement proposal 10.302 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.303 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.303 The concerned dealing official from Technical Department shall

10.304 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE

278
 10.305 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.306 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.304 The proposal should be examined in details by the Settlement
10.307 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.305 Recommendations of the Settlement Advisory Committee shall be
10.308 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.306 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.307 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.308 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.89 These guidelines have been framed with a view to provide 1.89 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.90 The compromise should be a negotiated settlement under which 1.90 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of
realization of security appear bleak, the primary/collateral securities are
insufficient to cover the out standings and projects under implementation which
are delayed/ projects abandoned due to the reasons beyond the control of the
borrower.
(c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable No change
chances of realization of security appear bleak, the primary/collateral
securities are insufficient to cover the out standings and projects under
implementation which are delayed/ projects abandoned due to the reasons

279
 beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to remote.
No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent opportunity cost of delay in early recovery shall also have to be
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the considered For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.45 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.45 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.133 Foregoing of lawyers fees and other legal, incidental charges. 4.45 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.134 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.135 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

280

 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
 Simple interest @ prevailing sector rate on reducing
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days. -do-
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment.
-do-
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days
from the date of dispatch of the sanction letter).
No change

4.137 As far as possible proposal should provide for recovery of compromise

4.137 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above No change

4.138 Post Dated Cheques may be obtained for the balance payment and
4.138 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any.
No change
4.139 In case where One Time Settlement is considered based on the One Time
4.139 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis,
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed. For more clarity.
LENDER also.

5. Other issues 5.89 In case of defaults on not adhering to installment deadlines penal 5.89 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.90 Right of forfeiture in case of persistent defaults despite fixation of 5.90 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.89 A Compromise Deed should be documented as per the advice of Legal 6.89 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.90 The Legal Department should ensure that all documents/ securities are 6.90 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The

281
 borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

89) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
90) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.

282
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
283
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.309 The borrower should come forward with a detailed settlement proposal 10.309 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since

284
 commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.310 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.310 The concerned dealing official from Technical Department shall

10.311 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE No change
10.312 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.313 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.311 The proposal should be examined in details by the Settlement
10.314 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.312 Recommendations of the Settlement Advisory Committee shall be
10.315 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.313 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy. No change

10.314 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.315 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.91 These guidelines have been framed with a view to provide 1.91 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.92 The compromise should be a negotiated settlement under which 1.92 The compromise should be a negotiated settlement under
No change

285
 THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.46 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.46 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

286
4. Re-payment 4.136 Foregoing of lawyers fees and other legal, incidental charges. 4.46 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.137 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.138 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.140 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.140 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.141 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.141 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.142 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.142 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.91 In case of defaults on not adhering to installment deadlines penal 5.91 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.92 Right of forfeiture in case of persistent defaults despite fixation of 5.92 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.91 A Compromise Deed should be documented as per the advice of Legal 6.91 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.92 The Legal Department should ensure that all documents/ securities are 6.92 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

287
7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

91) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
92) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

288
  Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
289
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.316 The borrower should come forward with a detailed settlement proposal 10.316 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

290
 Alongwith application, the borrower shall provide the following
documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.317 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.317 The concerned dealing official from Technical Department shall

10.318 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.319 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.320 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.318 The proposal should be examined in details by the Settlement
Advisory Committee.
10.321 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.319 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.322 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.320 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.321 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.322 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

291
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.93 These guidelines have been framed with a view to provide 1.93 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.94 The compromise should be a negotiated settlement under which 1.94 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the

292
 One Time Settlement proposal.
3. Cut-off-Date 3.47 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.139 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.140 Foregoing of penal interest/liquidated damages.
4.141 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.143 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.144 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
4.145 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
293
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.47 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.47 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.143 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
4.144 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
4.145 In case of consortium/co-financing of projects, sharing security on For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
followed.
5. Other issues 5.93 In case of defaults on not adhering to installment deadlines penal 5.93 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.94 Right of forfeiture in case of persistent defaults despite fixation of 5.94 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.93 A Compromise Deed should be documented as per the advice of Legal 6.93 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.94 The Legal Department should ensure that all documents/ securities are 6.94 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.

294
  Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

93) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
94) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if No change
 Unit lying closed for the last 3years. any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :

295

1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
296
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
 Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.323 The borrower should come forward with a detailed settlement proposal 10.323 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.324 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.324 The concerned dealing official from Technical Department shall

10.325 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.326 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.327 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.325 The proposal should be examined in details by the Settlement
Advisory Committee.
10.328 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.326 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.329 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change

297
 10.327 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.328 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.329 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.95 These guidelines have been framed with a view to provide 1.95 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.96 The compromise should be a negotiated settlement under which 1.96 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time

298

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.48 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.142 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.143 Foregoing of penal interest/liquidated damages.
4.144 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
299
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.48 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.48 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
 within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.146 As far as possible proposal should provide for recovery of compromise

4.146 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.147 Post Dated Cheques may be obtained for the balance payment and
4.147 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.148 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.148 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.95 In case of defaults on not adhering to installment deadlines penal 5.95 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.96 Right of forfeiture in case of persistent defaults despite fixation of 5.96 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.95 A Compromise Deed should be documented as per the advice of Legal 6.95 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.96 The Legal Department should ensure that all documents/ securities are 6.96 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

300
  The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

95) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
96) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

301
  The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
302
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
 2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.330 The borrower should come forward with a detailed settlement proposal 10.330 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.

303
 10.331 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.331 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.332 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.333 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.334 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.332 The proposal should be examined in details by the Settlement
Advisory Committee.
10.335 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.333 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.336 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.334 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.335 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.336 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.97 These guidelines have been framed with a view to provide 1.97 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.98 The compromise should be a negotiated settlement under which 1.98 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)

304
 No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.49 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.49 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.145 Foregoing of lawyers fees and other legal, incidental charges. 4.49 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.146 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.147 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

305
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

sanction letter (excluding three days from the date of -do-
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS -do-
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and
lower plus 1%.
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.149 As far as possible proposal should provide for recovery of compromise

4.149 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.150 Post Dated Cheques may be obtained for the balance payment and
4.150 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.151 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.151 In case of consortium/co-financing of projects, sharing security on
pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
followed.

5. Other issues 5.97 In case of defaults on not adhering to installment deadlines penal 5.97 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.98 Right of forfeiture in case of persistent defaults despite fixation of 5.98 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.97 A Compromise Deed should be documented as per the advice of Legal 6.97 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.98 The Legal Department should ensure that all documents/ securities are 6.98 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

306
 7.3 Value of the security available including net worth of the borrowers/
guarantors.
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
7.4 Valuation of assets:-

 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

97) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
98) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change

307
  Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
308
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.337 The borrower should come forward with a detailed settlement proposal 10.337 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at

309
 the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.338 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.338 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.339 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.340 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.341 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.339 The proposal should be examined in details by the Settlement
Advisory Committee.
10.342 Details of One Time Settlement approved by MD shall be submitted to
10.340 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.343 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.341 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.342 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.343 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

310
S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification
o.
1. Aim/Objectives 1.99 These guidelines have been framed with a view to provide 1.99 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.100 The compromise should be a negotiated settlement under which 1.100 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

311
3. Cut-off-Date 3.50 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.50 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.148 Foregoing of lawyers fees and other legal, incidental charges. 4.50 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.149 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.150 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.152 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.152 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.153 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.153 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.154 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.154 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.99 In case of defaults on not adhering to installment deadlines penal 5.99 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.100 Right of forfeiture in case of persistent defaults despite fixation of 5.100 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

312
6. Legal 6.99 A Compromise Deed should be documented as per the advice of Legal 6.99 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.100 The Legal Department should ensure that all documents/ securities are 6.100 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

99) For NPAs over 5years as on the cut- off date

313
 & A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently-
100% of the Principal
100) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
314
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
No change
any two of the following conditions prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3 No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
 2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
CGM(DCCS), Member
CGM(PTS), Member
GM(PMES), Member
DGM(MS)/ (FS), Member
AGM(FS), Convenor
Sr Manager( Law), Member
315
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 Director (Finance) |
 Director(Technical) | (Senior Director will Chair the
Meeting)
 All HODs (Technical/F&A/Legal)
 Internal Auditors
 Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.344 The borrower should come forward with a detailed settlement proposal 10.344 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.345 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.345 The concerned dealing official from Technical Department shall

10.346 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.347 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.348 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.346 The proposal should be examined in details by the Settlement
Advisory Committee.
10.349 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.347 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.350 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.348 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.349 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.350 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.

316
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.101 These guidelines have been framed with a view to provide 1.101 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.102 The compromise should be a negotiated settlement under which 1.102 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the

317
 borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.51 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.151 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.152 Foregoing of penal interest/liquidated damages.
4.153 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.155 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
318
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.51 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.51 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.155 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
 in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.156 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.156 Post Dated Cheques may be obtained for the balance payment and
No change
interest, if any.

4.157 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.157 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.101 In case of defaults on not adhering to installment deadlines penal 5.101 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.102 Right of forfeiture in case of persistent defaults despite fixation of 5.102 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.101 A Compromise Deed should be documented as per the advice of Legal 6.101 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.102 The Legal Department should ensure that all documents/ securities are 6.102 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement
319
could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

101) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
102) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent No change
years
valuer is lower than the loan outstanding/security not created.
No change

320

Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
321
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
 Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.351 The borrower should come forward with a detailed settlement proposal 10.351 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.352 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.352 The concerned dealing official from Technical Department shall

10.353 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change

322
 Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.354 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.355 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.353 The proposal should be examined in details by the Settlement
10.356 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.354 Recommendations of the Settlement Advisory Committee shall be
10.357 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.355 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.356 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.357 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.103 These guidelines have been framed with a view to provide 1.103 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.104 The compromise should be a negotiated settlement under which 1.104 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which

323
 are delayed/ projects abandoned due to the reasons beyond the control of the securities are insufficient to cover the out standings and projects under
borrower. implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to remote.
No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent opportunity cost of delay in early recovery shall also have to be
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the considered For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.52 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.52 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.154 Foregoing of lawyers fees and other legal, incidental charges. 4.52 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.155 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.156 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-

324
 sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing -do-

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and -do-
lower plus 1%.
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.158 As far as possible proposal should provide for recovery of compromise

4.158 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.159 Post Dated Cheques may be obtained for the balance payment and
4.159 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.160 In case where One Time Settlement is considered based on the One Time
4.160 In case of consortium/co-financing of projects, sharing security on For more clarity.
Settlement of other financial institutions sharing security on pari-pasu basis,
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed.
LENDER also.

5. Other issues 5.103 In case of defaults on not adhering to installment deadlines penal 5.103 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.104 Right of forfeiture in case of persistent defaults despite fixation of 5.104 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.103 A Compromise Deed should be documented as per the advice of Legal 6.103 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.104 The Legal Department should ensure that all documents/ securities are 6.104 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

325
 7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.  Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT
Valuation of assets is an
approved Govt. Valuer.
important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

103) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
104) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more

326

B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
D : Settlement amount for specific Sectors :
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
327
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
  For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.358 The borrower should come forward with a detailed settlement proposal 10.358 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a

328
 certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.359 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.359 The concerned dealing official from Technical Department shall

10.360 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.361 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.362 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.360 The proposal should be examined in details by the Settlement
10.363 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.361 Recommendations of the Settlement Advisory Committee shall be
10.364 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.362 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.363 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.364 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.105 These guidelines have been framed with a view to provide 1.105 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the

329
 Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.106 The compromise should be a negotiated settlement under which 1.106 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.53 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.53 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of

330
 which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.157 Foregoing of lawyers fees and other legal, incidental charges. 4.53 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.158 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.159 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.161 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.161 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.162 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.162 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.163 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.163 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.105 In case of defaults on not adhering to installment deadlines penal 5.105 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.106 Right of forfeiture in case of persistent defaults despite fixation of 5.106 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.105 A Compromise Deed should be documented as per the advice of Legal 6.105 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.106 The Legal Department should ensure that all documents/ securities are 6.106 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered

331
 unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

105) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
106) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail

332

 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
333
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-

3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
 For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

334
10. Procedure 10.365 The borrower should come forward with a detailed settlement proposal 10.365 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.366 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.366 The concerned dealing official from Technical Department shall

10.367 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.368 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.369 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.367 The proposal should be examined in details by the Settlement
Advisory Committee.
10.370 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.368 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.371 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.369 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.370 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.371 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

335
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.107 These guidelines have been framed with a view to provide 1.107 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.108 The compromise should be a negotiated settlement under which 1.108 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred

336

2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.54 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.160 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.161 Foregoing of penal interest/liquidated damages.
4.162 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.164 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.165 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
4.166 In case where One Time Settlement is considered based on the One Time
337
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.54 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.54 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.164 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
4.165 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
 Settlement of other financial institutions sharing security on pari-pasu basis, 4.166 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.107 In case of defaults on not adhering to installment deadlines penal 5.107 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.108 Right of forfeiture in case of persistent defaults despite fixation of 5.108 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.107 A Compromise Deed should be documented as per the advice of Legal 6.107 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.108 The Legal Department should ensure that all documents/ securities are 6.108 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.

338
  Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

107) For NPAs over 5years as on the cut- off date A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal &
Where the financial position of the company has not improved
subsequently-100% of the Principal
108) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 Suits pending for the last 3 years.

 The company has never achieved cash break even

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.

B : Settlement amount : Amount below principal : 100% of the Principal outstanding.

1) For NPAs over 5 years as on the cut off date and, if any two of the following B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years following condition prevail:
 Suits pending for more than 5 years  Unit lying closed for more than 5years

 Suits pending for more than 5 years

 The company has never achieved cash break even

 The company has remained unimplemented for more than 3 years  The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent years No change
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created.
already provided for/ written off in the books of THE LENDER) No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change

339

C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
D : Settlement amount for specific Sectors :
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
340
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
 to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.372 The borrower should come forward with a detailed settlement proposal 10.372 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.373 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.373 The concerned dealing official from Technical Department shall

10.374 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.375 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.376 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.374 The proposal should be examined in details by the Settlement
Advisory Committee.
10.377 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.375 Recommendations of the Settlement Advisory Committee shall be

341
 placed before MD CMD for consideration and approval.
10.378 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.376 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.377 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.378 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.109 These guidelines have been framed with a view to provide 1.109 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.110 The compromise should be a negotiated settlement under which 1.110 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or

342

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.55 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.163 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.164 Foregoing of penal interest/liquidated damages.
4.165 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
343
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.55 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.55 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
 Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.167 As far as possible proposal should provide for recovery of compromise

4.167 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.168 Post Dated Cheques may be obtained for the balance payment and
4.168 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.169 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.169 In case of consortium/co-financing of projects, sharing security on
For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
followed.

5. Other issues 5.109 In case of defaults on not adhering to installment deadlines penal 5.109 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.110 Right of forfeiture in case of persistent defaults despite fixation of 5.110 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.109 A Compromise Deed should be documented as per the advice of Legal 6.109 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.110 The Legal Department should ensure that all documents/ securities are 6.110 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

344
 valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

109) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
110) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

345
  The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
346
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
  For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.379 The borrower should come forward with a detailed settlement proposal 10.379 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS

347
 amount proposed.
 Status of operation of the plant – Operational or
10.380 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.380 The concerned dealing official from Technical Department shall

10.381 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.382 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.383 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.381 The proposal should be examined in details by the Settlement
10.384 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.382 Recommendations of the Settlement Advisory Committee shall be
10.385 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.383 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.384 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.385 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.111 These guidelines have been framed with a view to provide 1.111 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.112 The compromise should be a negotiated settlement under which 1.112 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.

348
 Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.56 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.56 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.166 Foregoing of lawyers fees and other legal, incidental charges. 4.56 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.167 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

349
 4.168 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c). to the P & L A/c).
No change
4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount
deserving cases. which shall be charged as follows :
Modified to have more clarity
 No interest – if OTS amount is paid within 60 days from the date of
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter) -do-

 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
 Simple interest @ prevailing sector rate on reducing
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days. -do-
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment.
-do-
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days
from the date of dispatch of the sanction letter).
No change

4.170 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.170 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above No change

4.171 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.171 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
No change
4.172 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.172 In case of consortium/co-financing of projects, sharing security on
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed. For more clarity.

5. Other issues 5.111 In case of defaults on not adhering to installment deadlines penal 5.111 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.112 Right of forfeiture in case of persistent defaults despite fixation of 5.112 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.111 A Compromise Deed should be documented as per the advice of Legal 6.111 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.112 The Legal Department should ensure that all documents/ securities are 6.112 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change

350
 amount 7.2 If in operation, financial performance in the last three years.
No change
7.2 If in operation, financial performance in the last three years.

7.3 Value of the security available including net worth of the borrowers/
guarantors. No change
7.3 Value of the security available including net worth of the borrowers/
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
7.4 Valuation of assets:-
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

111) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
112) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

351

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
352
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
 applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.386 The borrower should come forward with a detailed settlement proposal 10.386 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

353
  Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.387 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.387 The concerned dealing official from Technical Department shall

10.388 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.389 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.390 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.388 The proposal should be examined in details by the Settlement
10.391 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.389 Recommendations of the Settlement Advisory Committee shall be
10.392 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.390 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.391 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.392 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

354
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.113 These guidelines have been framed with a view to provide 1.113 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.114 The compromise should be a negotiated settlement under which 1.114 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

355
3. Cut-off-Date 3.57 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.57 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.169 Foregoing of lawyers fees and other legal, incidental charges. 4.57 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.170 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.171 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.173 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.173 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.174 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.174 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.175 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.175 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.113 In case of defaults on not adhering to installment deadlines penal 5.113 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

356
 5.114 Right of forfeiture in case of persistent defaults despite fixation of 5.114 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.113 A Compromise Deed should be documented as per the advice of Legal 6.113 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.114 The Legal Department should ensure that all documents/ securities are 6.114 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

357
A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

113) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
114) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever

358
 is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
CGM(DCCS), Member
CGM(PTS), Member
359
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 Director (Finance) |
 Director(Technical) | (Senior Director will Chair the
 GM(PMES), Member Meeting)
DGM(MS)/ (FS), Member  All HODs (Technical/F&A/Legal)
AGM(FS), Convenor  Internal Auditors
Sr Manager( Law), Member  Legal Auditors
Internal Auditor, Member  Recovery Head, Convener.
Legal Auditor, Member

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.393 The borrower should come forward with a detailed settlement proposal 10.393 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.394 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.394 The concerned dealing official from Technical Department shall

10.395 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.396 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.397 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.395 The proposal should be examined in details by the Settlement
Advisory Committee.
10.398 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.396 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.399 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.397 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.398 Details of One Time Settlement approved by MD CMD shall be

360
 submitted to the Board for information.
10.399 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.115 These guidelines have been framed with a view to provide 1.115 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.116 The compromise should be a negotiated settlement under which 1.116 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural

361

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.58 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.172 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.173 Foregoing of penal interest/liquidated damages.
4.174 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
362
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.58 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.58 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
 4.176 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.176 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
the state of affairs of the borrower and subject to payment of interest No change
indicated in para 4.4 above

4.177 Post Dated Cheques may be obtained for the balance payment and 4.177 Post Dated Cheques may be obtained for the balance payment and
interest, if any. interest, if any. No change

4.178 In case where One Time Settlement is considered based on the One Time 4.178 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis, pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
the terms & conditions of the lead institutions may be followed by THE followed.
LENDER also.

5. Other issues 5.115 In case of defaults on not adhering to installment deadlines penal 5.115 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.116 Right of forfeiture in case of persistent defaults despite fixation of 5.116 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.115 A Compromise Deed should be documented as per the advice of Legal 6.115 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.116 The Legal Department should ensure that all documents/ securities are 6.116 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

363
 submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

115) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
116) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

364
  Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
365
 The company project has remained unimplemented for more than 3
years
No change
 Realizable value of the mortgaged assets as assessed by No change
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
 Action initiated under SARFAESI Act and is pending for 3 No change
years.
Amount below the principal outstanding(maximum to the extent of the No change
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date- No change
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at Deleted as no project in the
document rate or at present lending rate, whichever is lower. portfolio.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
 Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.400 The borrower should come forward with a detailed settlement proposal 10.400 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.401 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

366
 10.401 The concerned dealing official from Technical Department shall
10.402 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.403 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.404 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.402 The proposal should be examined in details by the Settlement
Advisory Committee.
10.405 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.403 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.406 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.404 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.405 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.406 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.117 These guidelines have been framed with a view to provide 1.117 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.118 The compromise should be a negotiated settlement under which 1.118 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

367
 (c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.59 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.59 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.175 Foregoing of lawyers fees and other legal, incidental charges. 4.59 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.176 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.177 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity

368
 deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

-do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing
-do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.179 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.179 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.180 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.180 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.181 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.181 In case of consortium/co-financing of projects, sharing security on
For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
followed.

5. Other issues 5.117 In case of defaults on not adhering to installment deadlines penal 5.117 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.118 Right of forfeiture in case of persistent defaults despite fixation of 5.118 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.117 A Compromise Deed should be documented as per the advice of Legal 6.117 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.118 The Legal Department should ensure that all documents/ securities are 6.118 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

369
 7.4 Valuation of assets:-
7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT
important criteria for deciding the
approved Govt. Valuer.
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

117) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
118) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not

370

100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
371
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
 LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower. Settlement amount may be arrived at as follows:-

 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.407 The borrower should come forward with a detailed settlement proposal 10.407 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where

372
 balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.408 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.408 The concerned dealing official from Technical Department shall

10.409 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.410 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.411 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.409 The proposal should be examined in details by the Settlement
10.412 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.410 Recommendations of the Settlement Advisory Committee shall be
10.413 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.411 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.412 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.413 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

373
 o.
1. Aim/Objectives 1.119 These guidelines have been framed with a view to provide 1.119 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.120 The compromise should be a negotiated settlement under which 1.120 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.60 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

374
 NPA Date 3.60 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.178 Foregoing of lawyers fees and other legal, incidental charges. 4.60 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.179 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.180 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.182 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.182 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.183 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.183 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.184 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.184 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.119 In case of defaults on not adhering to installment deadlines penal 5.119 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.120 Right of forfeiture in case of persistent defaults despite fixation of 5.120 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.119 A Compromise Deed should be documented as per the advice of Legal 6.119 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

375
 6.120 The Legal Department should ensure that all documents/ securities are 6.120 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

119) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&

376

120) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
377
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower.
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

378
 (The decision of SAC shall be put up to the CMD)

10. Procedure 10.414 The borrower should come forward with a detailed settlement proposal 10.414 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.415 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.415 The concerned dealing official from Technical Department shall

10.416 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.417 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.418 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.416 The proposal should be examined in details by the Settlement
Advisory Committee.
10.419 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.417 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.420 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.418 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.419 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.420 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

379
 11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.121 These guidelines have been framed with a view to provide 1.121 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.122 The compromise should be a negotiated settlement under which 1.122 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood

380
 of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.61 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.181 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.182 Foregoing of penal interest/liquidated damages.
4.183 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.185 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.186 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
381
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.61 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.61 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.185 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
4.186 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
 4.187 In case where One Time Settlement is considered based on the One Time
4.187 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis, For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed.
LENDER also.

5. Other issues 5.121 In case of defaults on not adhering to installment deadlines penal 5.121 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.122 Right of forfeiture in case of persistent defaults despite fixation of 5.122 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.121 A Compromise Deed should be documented as per the advice of Legal 6.121 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.122 The Legal Department should ensure that all documents/ securities are 6.122 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after

382

A : Settlement amount : 100% Principal outstanding
121) For NPAs over 5years as on the cut- off date
&
Where the financial position of the company has not improved subsequently-
100% of the Principal
122) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
383
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.
However, the following broad guidelines shall be followed :
A : Settlement amount : 100% Principal outstanding
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change

C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
384
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
 alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.421 The borrower should come forward with a detailed settlement proposal 10.421 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.422 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.422 The concerned dealing official from Technical Department shall

10.423 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.424 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.425 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.

385
 10.423 The proposal should be examined in details by the Settlement
10.426 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.424 Recommendations of the Settlement Advisory Committee shall be
10.427 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
No change
10.425 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.426 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.427 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.123 These guidelines have been framed with a view to provide 1.123 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.124 The compromise should be a negotiated settlement under which 1.124 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to

386
 revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered.
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
considered
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.62 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.62 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.184 Foregoing of lawyers fees and other legal, incidental charges. 4.62 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.185 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.186 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

387
  beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
-do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory.

Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.188 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.188 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.189 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.189 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.190 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.190 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.123 In case of defaults on not adhering to installment deadlines penal 5.123 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.124 Right of forfeiture in case of persistent defaults despite fixation of 5.124 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.123 A Compromise Deed should be documented as per the advice of Legal 6.123 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.124 The Legal Department should ensure that all documents/ securities are 6.124 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of

388
 secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

123) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
124) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the

389
  Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
390
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.428 The borrower should come forward with a detailed settlement proposal 10.428 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.

391
  The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.429 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.429 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.430 This proposal should be examined in details by the Settlement Advisory No change
Convener of SAC alongwith the detailed background note
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.431 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.432 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.430 The proposal should be examined in details by the Settlement
Advisory Committee.
10.433 Details of One Time Settlement approved by MD shall be submitted to
10.431 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.434 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.432 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.433 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.434 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.125 These guidelines have been framed with a view to provide 1.125 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.126 The compromise should be a negotiated settlement under which 1.126 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

392
2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.63 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.63 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.187 Foregoing of lawyers fees and other legal, incidental charges. 4.63 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.188 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

393
 4.189 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing -do-

 beyond 60 days upto 240 days at present lending rate on simple interest
balance basis from the date of sanction letter , if OTS
basis from the date of sanction.
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
-do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.191 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.191 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.192 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.192 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.193 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.193 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.125 In case of defaults on not adhering to installment deadlines penal 5.125 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.126 Right of forfeiture in case of persistent defaults despite fixation of 5.126 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.125 A Compromise Deed should be documented as per the advice of Legal 6.125 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.126 The Legal Department should ensure that all documents/ securities are 6.126 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at

394
 compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount 7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/
guarantors. No change
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

125) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
126) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

395
  Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
396
 The company project has never achieved cash break even No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3 No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
No change
 In case security is not created.
 Action initiated under SARFAESI Act and is pending for 3
No change
years.
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
 D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at than Grid connected)/MSW and SPV which is not being financed by THE
document rate or at present lending rate, whichever is lower. LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
 For NPAs between 2-5 years old-100% of the Principal. Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
 For NPAs over 8 years old-50% ot the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.435 The borrower should come forward with a detailed settlement proposal 10.435 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

397
  The valuation of mortgaged assets.
 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.436 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.436 The concerned dealing official from Technical Department shall

10.437 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.438 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.439 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.437 The proposal should be examined in details by the Settlement
10.440 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.438 Recommendations of the Settlement Advisory Committee shall be
10.441 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.439 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.440 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.441 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

398
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.127 These guidelines have been framed with a view to provide 1.127 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.128 The compromise should be a negotiated settlement under which 1.128 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

399
 Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.64 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.64 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.190 Foregoing of lawyers fees and other legal, incidental charges. 4.64 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.191 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.192 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.194 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.194 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.195 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.195 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.196 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.196 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.127 In case of defaults on not adhering to installment deadlines penal 5.127 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is

400
 interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.128 Right of forfeiture in case of persistent defaults despite fixation of 5.128 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.127 A Compromise Deed should be documented as per the advice of Legal 6.127 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.128 The Legal Department should ensure that all documents/ securities are 6.128 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

401
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

127) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
128) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

402

100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
403
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.442 The borrower should come forward with a detailed settlement proposal 10.442 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.443 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.443 The concerned dealing official from Technical Department shall

10.444 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.445 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.446 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.444 The proposal should be examined in details by the Settlement
Advisory Committee.
10.447 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.445 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.448 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.446 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

404
 10.447 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.448 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.129 These guidelines have been framed with a view to provide 1.129 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.130 The compromise should be a negotiated settlement under which 1.130 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower

405

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.65 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.193 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.194 Foregoing of penal interest/liquidated damages.
4.195 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
406
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.65 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.65 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
 4.197 As far as possible proposal should provide for recovery of compromise
4.197 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.198 Post Dated Cheques may be obtained for the balance payment and
4.198 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.199 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.199 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.129 In case of defaults on not adhering to installment deadlines penal 5.129 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.130 Right of forfeiture in case of persistent defaults despite fixation of 5.130 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.129 A Compromise Deed should be documented as per the advice of Legal 6.129 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.130 The Legal Department should ensure that all documents/ securities are 6.130 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

407
  The inspection of the secured assets shall be carried out before
submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

129) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
130) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

408

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
409
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
 third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.449 The borrower should come forward with a detailed settlement proposal 10.449 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.450 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

410
 10.450 The concerned dealing official from Technical Department shall
10.451 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note No change
(covering proposal of the borrower, eligibility as per THE
10.452 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.453 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.451 The proposal should be examined in details by the Settlement
10.454 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.452 Recommendations of the Settlement Advisory Committee shall be
10.455 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.453 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.454 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.455 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.131 These guidelines have been framed with a view to provide 1.131 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.132 The compromise should be a negotiated settlement under which 1.132 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change

411
 And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.66 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.66 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.196 Foregoing of lawyers fees and other legal, incidental charges. 4.66 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.197 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.198 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

412
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

-do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing
-do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.200 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.200 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.201 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.201 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.202 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.202 In case of consortium/co-financing of projects, sharing security on
For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
followed.

5. Other issues 5.131 In case of defaults on not adhering to installment deadlines penal 5.131 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.132 Right of forfeiture in case of persistent defaults despite fixation of 5.132 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.131 A Compromise Deed should be documented as per the advice of Legal 6.131 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.132 The Legal Department should ensure that all documents/ securities are 6.132 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/

413
 guarantors. 7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more 7.4 Valuation of assets:-
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT
important criteria for deciding the
approved Govt. Valuer.
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

131) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
132) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

414

100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
415
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-

 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.456 The borrower should come forward with a detailed settlement proposal 10.456 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,

416
 if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.457 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.457 The concerned dealing official from Technical Department shall

10.458 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.459 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.460 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.458 The proposal should be examined in details by the Settlement
10.461 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.459 Recommendations of the Settlement Advisory Committee shall be
10.462 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.460 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.461 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.462 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

417
S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification
o.
1. Aim/Objectives 1.133 These guidelines have been framed with a view to provide 1.133 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.134 The compromise should be a negotiated settlement under which 1.134 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.67 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this

418
 This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.67 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.199 Foregoing of lawyers fees and other legal, incidental charges. 4.67 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.200 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.201 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.203 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.203 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.204 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.204 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.205 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.205 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.133 In case of defaults on not adhering to installment deadlines penal 5.133 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.134 Right of forfeiture in case of persistent defaults despite fixation of 5.134 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

419
6. Legal 6.133 A Compromise Deed should be documented as per the advice of Legal 6.133 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.134 The Legal Department should ensure that all documents/ securities are 6.134 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

133) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&

420
 Where the financial position of the company has not improved subsequently-
100% of the Principal
134) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
421
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
 2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors

422
 Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.463 The borrower should come forward with a detailed settlement proposal 10.463 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.464 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.464 The concerned dealing official from Technical Department shall

10.465 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.466 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.467 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.465 The proposal should be examined in details by the Settlement
Advisory Committee.
10.468 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.466 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.469 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.467 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.468 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.469 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific

423
 these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.135 These guidelines have been framed with a view to provide 1.135 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.136 The compromise should be a negotiated settlement under which 1.136 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are

424

2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.68 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.202 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.203 Foregoing of penal interest/liquidated damages.
4.204 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.206 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
425
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.68 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.68 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.206 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
 4.207 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.207 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
No change

4.208 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.208 In case of consortium/co-financing of projects, sharing security on
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
LENDER also. followed.

5. Other issues 5.135 In case of defaults on not adhering to installment deadlines penal 5.135 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.136 Right of forfeiture in case of persistent defaults despite fixation of 5.136 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.135 A Compromise Deed should be documented as per the advice of Legal 6.135 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.136 The Legal Department should ensure that all documents/ securities are 6.136 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

426
  Value of securities (saleable/realizable value of physical
assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

135) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
136) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent No change
years
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan

427

Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
428
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
 Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.470 The borrower should come forward with a detailed settlement proposal 10.470 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.471 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.471 The concerned dealing official from Technical Department shall

10.472 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE

429
 10.473 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.474 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.472 The proposal should be examined in details by the Settlement
10.475 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.473 Recommendations of the Settlement Advisory Committee shall be
10.476 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.474 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.475 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.476 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.137 These guidelines have been framed with a view to provide 1.137 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.138 The compromise should be a negotiated settlement under which 1.138 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of
realization of security appear bleak, the primary/collateral securities are
insufficient to cover the out standings and projects under implementation which
are delayed/ projects abandoned due to the reasons beyond the control of the
borrower.
(c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable No change
chances of realization of security appear bleak, the primary/collateral
securities are insufficient to cover the out standings and projects under
implementation which are delayed/ projects abandoned due to the reasons

430
 beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to remote.
No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent opportunity cost of delay in early recovery shall also have to be
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the considered For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.69 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.69 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.205 Foregoing of lawyers fees and other legal, incidental charges. 4.69 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.206 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.207 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

431

 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
 Simple interest @ prevailing sector rate on reducing
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days. -do-
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment.
-do-
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days
from the date of dispatch of the sanction letter).
No change

4.209 As far as possible proposal should provide for recovery of compromise

4.209 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above No change

4.210 Post Dated Cheques may be obtained for the balance payment and
4.210 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any.
No change
4.211 In case where One Time Settlement is considered based on the One Time
4.211 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis,
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed. For more clarity.
LENDER also.

5. Other issues 5.137 In case of defaults on not adhering to installment deadlines penal 5.137 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.138 Right of forfeiture in case of persistent defaults despite fixation of 5.138 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.137 A Compromise Deed should be documented as per the advice of Legal 6.137 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.138 The Legal Department should ensure that all documents/ securities are 6.138 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The

432
 borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

137) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
138) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.

433
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
434
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.477 The borrower should come forward with a detailed settlement proposal 10.477 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since

435
 commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.478 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.478 The concerned dealing official from Technical Department shall

10.479 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE No change
10.480 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.481 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.479 The proposal should be examined in details by the Settlement
10.482 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.480 Recommendations of the Settlement Advisory Committee shall be
10.483 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.481 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy. No change

10.482 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.483 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.139 These guidelines have been framed with a view to provide 1.139 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.140 The compromise should be a negotiated settlement under which 1.140 The compromise should be a negotiated settlement under
No change

436
 THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.70 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.70 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

437
4. Re-payment 4.208 Foregoing of lawyers fees and other legal, incidental charges. 4.70 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.209 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.210 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.212 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.212 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.213 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.213 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.214 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.214 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.139 In case of defaults on not adhering to installment deadlines penal 5.139 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.140 Right of forfeiture in case of persistent defaults despite fixation of 5.140 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.139 A Compromise Deed should be documented as per the advice of Legal 6.139 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.140 The Legal Department should ensure that all documents/ securities are 6.140 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

438
7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

139) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
140) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

439
  Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
440
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.484 The borrower should come forward with a detailed settlement proposal 10.484 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

441
 Alongwith application, the borrower shall provide the following
documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.485 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.485 The concerned dealing official from Technical Department shall

10.486 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.487 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.488 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.486 The proposal should be examined in details by the Settlement
Advisory Committee.
10.489 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.487 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.490 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.488 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.489 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.490 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

442
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.141 These guidelines have been framed with a view to provide 1.141 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.142 The compromise should be a negotiated settlement under which 1.142 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the

443
 One Time Settlement proposal.
3. Cut-off-Date 3.71 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.211 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.212 Foregoing of penal interest/liquidated damages.
4.213 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.215 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.216 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
4.217 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
444
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.71 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.71 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.215 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
4.216 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
4.217 In case of consortium/co-financing of projects, sharing security on For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
followed.
5. Other issues 5.141 In case of defaults on not adhering to installment deadlines penal 5.141 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.142 Right of forfeiture in case of persistent defaults despite fixation of 5.142 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.141 A Compromise Deed should be documented as per the advice of Legal 6.141 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.142 The Legal Department should ensure that all documents/ securities are 6.142 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.

445
  Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

141) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
142) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if No change
 Unit lying closed for the last 3years. any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :

446

1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
447
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
 Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.491 The borrower should come forward with a detailed settlement proposal 10.491 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.492 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.492 The concerned dealing official from Technical Department shall

10.493 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.494 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.495 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.493 The proposal should be examined in details by the Settlement
Advisory Committee.
10.496 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.494 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.497 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change

448
 10.495 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.496 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.497 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.143 These guidelines have been framed with a view to provide 1.143 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.144 The compromise should be a negotiated settlement under which 1.144 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time

449

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.72 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.214 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.215 Foregoing of penal interest/liquidated damages.
4.216 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
450
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.72 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.72 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
 within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.218 As far as possible proposal should provide for recovery of compromise

4.218 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.219 Post Dated Cheques may be obtained for the balance payment and
4.219 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.220 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.220 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.143 In case of defaults on not adhering to installment deadlines penal 5.143 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.144 Right of forfeiture in case of persistent defaults despite fixation of 5.144 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.143 A Compromise Deed should be documented as per the advice of Legal 6.143 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.144 The Legal Department should ensure that all documents/ securities are 6.144 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

451
  The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

143) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
144) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

452
  The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
453
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
 2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.498 The borrower should come forward with a detailed settlement proposal 10.498 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.

454
 10.499 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.499 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.500 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.501 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.502 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.500 The proposal should be examined in details by the Settlement
Advisory Committee.
10.503 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.501 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.504 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.502 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.503 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.504 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.145 These guidelines have been framed with a view to provide 1.145 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.146 The compromise should be a negotiated settlement under which 1.146 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)

455
 No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.73 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.73 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.217 Foregoing of lawyers fees and other legal, incidental charges. 4.73 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.218 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.219 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

456
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

sanction letter (excluding three days from the date of -do-
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS -do-
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and
lower plus 1%.
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.221 As far as possible proposal should provide for recovery of compromise

4.221 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.222 Post Dated Cheques may be obtained for the balance payment and
4.222 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.223 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.223 In case of consortium/co-financing of projects, sharing security on
pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
followed.

5. Other issues 5.145 In case of defaults on not adhering to installment deadlines penal 5.145 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.146 Right of forfeiture in case of persistent defaults despite fixation of 5.146 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.145 A Compromise Deed should be documented as per the advice of Legal 6.145 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.146 The Legal Department should ensure that all documents/ securities are 6.146 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

457
 7.3 Value of the security available including net worth of the borrowers/
guarantors.
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
7.4 Valuation of assets:-

 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

145) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
146) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change

458
  Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
459
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.505 The borrower should come forward with a detailed settlement proposal 10.505 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at

460
 the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.506 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.506 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.507 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.508 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.509 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.507 The proposal should be examined in details by the Settlement
Advisory Committee.
10.510 Details of One Time Settlement approved by MD shall be submitted to
10.508 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.511 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.509 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.510 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.511 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

461
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.147 These guidelines have been framed with a view to provide 1.147 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.148 The compromise should be a negotiated settlement under which 1.148 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

462
 Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.74 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.74 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.220 Foregoing of lawyers fees and other legal, incidental charges. 4.74 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.221 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.222 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.224 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.224 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.225 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.225 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.226 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.226 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.147 In case of defaults on not adhering to installment deadlines penal 5.147 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is

463
 interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.148 Right of forfeiture in case of persistent defaults despite fixation of 5.148 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.147 A Compromise Deed should be documented as per the advice of Legal 6.147 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.148 The Legal Department should ensure that all documents/ securities are 6.148 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

464
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

147) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
148) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

465

100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
466
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.512 The borrower should come forward with a detailed settlement proposal 10.512 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.513 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.513 The concerned dealing official from Technical Department shall

10.514 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.515 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.516 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.514 The proposal should be examined in details by the Settlement
Advisory Committee.
10.517 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.515 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.518 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.516 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

467
 10.517 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.518 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

468
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.149 These guidelines have been framed with a view to provide 1.149 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.150 The compromise should be a negotiated settlement under which 1.150 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

469
 Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.75 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.75 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.223 Foregoing of lawyers fees and other legal, incidental charges. 4.75 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.224 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.225 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.227 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.227 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.228 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.228 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.229 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.229 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.149 In case of defaults on not adhering to installment deadlines penal 5.149 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is

470
 interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.150 Right of forfeiture in case of persistent defaults despite fixation of 5.150 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.149 A Compromise Deed should be documented as per the advice of Legal 6.149 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.150 The Legal Department should ensure that all documents/ securities are 6.150 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

471
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

149) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
150) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

472

100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
473
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.519 The borrower should come forward with a detailed settlement proposal 10.519 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.520 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.520 The concerned dealing official from Technical Department shall

10.521 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.522 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.523 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.521 The proposal should be examined in details by the Settlement
Advisory Committee.
10.524 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.522 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.525 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.523 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

474
 10.524 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.525 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.151 These guidelines have been framed with a view to provide 1.151 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.152 The compromise should be a negotiated settlement under which 1.152 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower

475

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.76 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.226 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.227 Foregoing of penal interest/liquidated damages.
4.228 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
476
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.76 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.76 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
 4.230 As far as possible proposal should provide for recovery of compromise
4.230 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.231 Post Dated Cheques may be obtained for the balance payment and
4.231 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.232 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.232 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.151 In case of defaults on not adhering to installment deadlines penal 5.151 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.152 Right of forfeiture in case of persistent defaults despite fixation of 5.152 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.151 A Compromise Deed should be documented as per the advice of Legal 6.151 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.152 The Legal Department should ensure that all documents/ securities are 6.152 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

477
  The inspection of the secured assets shall be carried out before
submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

151) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
152) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

478

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
479
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
 third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.526 The borrower should come forward with a detailed settlement proposal 10.526 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.527 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

480
 10.527 The concerned dealing official from Technical Department shall
10.528 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note No change
(covering proposal of the borrower, eligibility as per THE
10.529 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.530 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.528 The proposal should be examined in details by the Settlement
10.531 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.529 Recommendations of the Settlement Advisory Committee shall be
10.532 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.530 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.531 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.532 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.153 These guidelines have been framed with a view to provide 1.153 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.154 The compromise should be a negotiated settlement under which 1.154 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)

481
 No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.77 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.77 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.229 Foregoing of lawyers fees and other legal, incidental charges. 4.77 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.230 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.231 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

482
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

sanction letter (excluding three days from the date of -do-
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS -do-
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and
lower plus 1%.
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.233 As far as possible proposal should provide for recovery of compromise

4.233 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.234 Post Dated Cheques may be obtained for the balance payment and
4.234 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.235 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.235 In case of consortium/co-financing of projects, sharing security on
pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
followed.

5. Other issues 5.153 In case of defaults on not adhering to installment deadlines penal 5.153 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.154 Right of forfeiture in case of persistent defaults despite fixation of 5.154 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.153 A Compromise Deed should be documented as per the advice of Legal 6.153 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.154 The Legal Department should ensure that all documents/ securities are 6.154 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

483
 7.3 Value of the security available including net worth of the borrowers/
guarantors.
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
7.4 Valuation of assets:-

 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

153) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
154) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change

484
  Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
485
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.533 The borrower should come forward with a detailed settlement proposal 10.533 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at

486
 the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.534 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.534 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.535 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.536 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.537 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.535 The proposal should be examined in details by the Settlement
Advisory Committee.
10.538 Details of One Time Settlement approved by MD shall be submitted to
10.536 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.539 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.537 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.538 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.539 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

487
S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification
o.
1. Aim/Objectives 1.155 These guidelines have been framed with a view to provide 1.155 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.156 The compromise should be a negotiated settlement under which 1.156 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

488
3. Cut-off-Date 3.78 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.78 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.232 Foregoing of lawyers fees and other legal, incidental charges. 4.78 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.233 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.234 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.236 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.236 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.237 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.237 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.238 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.238 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.155 In case of defaults on not adhering to installment deadlines penal 5.155 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.156 Right of forfeiture in case of persistent defaults despite fixation of 5.156 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change

489
 condition. condition.

6. Legal 6.155 A Compromise Deed should be documented as per the advice of Legal 6.155 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.156 The Legal Department should ensure that all documents/ securities are 6.156 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

490
155) For NPAs over 5years as on the cut- off date
& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently-
100% of the Principal
156) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
491
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
No change
any two of the following conditions prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3 No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :

2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial D : Settlement amount for specific Sectors :
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
CGM(DCCS), Member
CGM(PTS), Member
GM(PMES), Member
DGM(MS)/ (FS), Member
AGM(FS), Convenor
492
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 Director (Finance) |
 Director(Technical) | (Senior Director will Chair the
Meeting)
 All HODs (Technical/F&A/Legal)
 Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.540 The borrower should come forward with a detailed settlement proposal 10.540 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.541 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.541 The concerned dealing official from Technical Department shall

10.542 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.543 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.544 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.542 The proposal should be examined in details by the Settlement
Advisory Committee.
10.545 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.543 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.546 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.544 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.545 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.546 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.

493
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.157 These guidelines have been framed with a view to provide 1.157 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.158 The compromise should be a negotiated settlement under which 1.158 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control

494

2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.79 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.235 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.236 Foregoing of penal interest/liquidated damages.
4.237 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.239 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
495
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.79 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.79 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.239 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
 4.240 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.240 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.241 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.241 In case of consortium/co-financing of projects, sharing security on
For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
followed.

5. Other issues 5.157 In case of defaults on not adhering to installment deadlines penal 5.157 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.158 Right of forfeiture in case of persistent defaults despite fixation of 5.158 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.157 A Compromise Deed should be documented as per the advice of Legal 6.157 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.158 The Legal Department should ensure that all documents/ securities are 6.158 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

496
  Value of securities (saleable/realizable value of physical
assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

157) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
158) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent No change
years
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.

497
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
498
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
 Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.547 The borrower should come forward with a detailed settlement proposal 10.547 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.548 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.548 The concerned dealing official from Technical Department shall

10.549 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.550 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and

499
 placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.551 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.549 The proposal should be examined in details by the Settlement
10.552 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.550 Recommendations of the Settlement Advisory Committee shall be
10.553 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.551 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.552 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.553 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.159 These guidelines have been framed with a view to provide 1.159 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.160 The compromise should be a negotiated settlement under which 1.160 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of
realization of security appear bleak, the primary/collateral securities are
insufficient to cover the out standings and projects under implementation which
are delayed/ projects abandoned due to the reasons beyond the control of the
borrower.
(c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable No change
chances of realization of security appear bleak, the primary/collateral
securities are insufficient to cover the out standings and projects under
implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower

500
 And/or
(d) The company is under purview of
New eligibility criteria added to
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/
speed-up recovery process.
revival proposal has been furnished.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
borrower. not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .

2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.80 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.80 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.238 Foregoing of lawyers fees and other legal, incidental charges. 4.80 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.239 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.240 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

501
  Simple interest @ prevailing sector rate on reducing -do-
 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is balance basis – for OTS amount paid beyond 240 days and -do-
lower plus 1%. upto the date of entire payment.

Provided, a down payment of 20% of the settlement amount is mandatory

Provided, a down payment of 25% of the settlement amount in mandatory. within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.242 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.242 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.243 Post Dated Cheques may be obtained for the balance payment and 4.243 Post Dated Cheques may be obtained for the balance payment and No change
interest, if any. interest, if any.

4.244 In case where One Time Settlement is considered based on the One Time 4.244 In case of consortium/co-financing of projects, sharing security on For more clarity.
Settlement of other financial institutions sharing security on pari-pasu basis, pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE followed.
LENDER also.

5. Other issues 5.159 In case of defaults on not adhering to installment deadlines penal 5.159 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.160 Right of forfeiture in case of persistent defaults despite fixation of 5.160 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.159 A Compromise Deed should be documented as per the advice of Legal 6.159 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.160 The Legal Department should ensure that all documents/ securities are 6.160 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an

502

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple
interest to the extent covered in the gross profit, The following broad guidelines
Settlement could be followed :
A : Settlement amount : 100% Principal outstanding
159) For NPAs over 5years as on the cut- off date
&
Where the financial position of the company has not improved subsequently-
100% of the Principal
160) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
503
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.
 Projects where principal outstanding is above Rs. 2.00 Crores : The
valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..
 The valuation report shall not be more than 6 months old.
 The inspection of the secured assets shall be carried out before
submitting the proposal for consideration of SAC.
8.1 The objective shall be to maximize recovery, keeping in view
the outstanding amount as well the principal amount due from the
Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :
 Value of securities (saleable/realizable value of physical
assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.
However, the following broad guidelines shall be followed :
A : Settlement amount : 100% Principal outstanding
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
504
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
  For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.554 The borrower should come forward with a detailed settlement proposal 10.554 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the

505
 proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.555 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.555 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.556 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.557 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.558 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.556 The proposal should be examined in details by the Settlement
Advisory Committee.
10.559 Details of One Time Settlement approved by MD shall be submitted to 10.557 Recommendations of the Settlement Advisory Committee shall be
the Board for information placed before MD CMD for consideration and approval.
10.560 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.558 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.559 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.560 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.161 These guidelines have been framed with a view to provide 1.161 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.162 The compromise should be a negotiated settlement under which 1.162 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change

506
 possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.81 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.81 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

507
4. Re-payment 4.241 Foregoing of lawyers fees and other legal, incidental charges. 4.81 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.242 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.243 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.245 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.245 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.246 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.246 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.247 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.247 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.161 In case of defaults on not adhering to installment deadlines penal 5.161 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.162 Right of forfeiture in case of persistent defaults despite fixation of 5.162 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.161 A Compromise Deed should be documented as per the advice of Legal 6.161 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.162 The Legal Department should ensure that all documents/ securities are 6.162 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

508
7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

161) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
162) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

509
  Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
510
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.561 The borrower should come forward with a detailed settlement proposal 10.561 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

511
 Alongwith application, the borrower shall provide the following
documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.562 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.562 The concerned dealing official from Technical Department shall

10.563 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.564 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.565 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.563 The proposal should be examined in details by the Settlement
Advisory Committee.
10.566 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.564 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.567 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.565 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.566 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.567 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

512
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.163 These guidelines have been framed with a view to provide 1.163 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.164 The compromise should be a negotiated settlement under which 1.164 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the

513
 One Time Settlement proposal.
3. Cut-off-Date 3.82 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.244 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.245 Foregoing of penal interest/liquidated damages.
4.246 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.248 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.249 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
4.250 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
514
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.82 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.82 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.248 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
4.249 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
4.250 In case of consortium/co-financing of projects, sharing security on For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
followed.
5. Other issues 5.163 In case of defaults on not adhering to installment deadlines penal 5.163 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.164 Right of forfeiture in case of persistent defaults despite fixation of 5.164 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.163 A Compromise Deed should be documented as per the advice of Legal 6.163 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.164 The Legal Department should ensure that all documents/ securities are 6.164 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.

515
  Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

163) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
164) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if No change
 Unit lying closed for the last 3years. any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :

516

1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
517
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
 Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.568 The borrower should come forward with a detailed settlement proposal 10.568 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.569 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.569 The concerned dealing official from Technical Department shall

10.570 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.571 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.572 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.570 The proposal should be examined in details by the Settlement
Advisory Committee.
10.573 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.571 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.574 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change

518
 10.572 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.573 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.574 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.165 These guidelines have been framed with a view to provide 1.165 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.166 The compromise should be a negotiated settlement under which 1.166 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time

519

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.83 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.247 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.248 Foregoing of penal interest/liquidated damages.
4.249 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
520
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.83 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.83 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
 within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.251 As far as possible proposal should provide for recovery of compromise

4.251 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.252 Post Dated Cheques may be obtained for the balance payment and
4.252 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.253 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.253 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.165 In case of defaults on not adhering to installment deadlines penal 5.165 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.166 Right of forfeiture in case of persistent defaults despite fixation of 5.166 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.165 A Compromise Deed should be documented as per the advice of Legal 6.165 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.166 The Legal Department should ensure that all documents/ securities are 6.166 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

521
  The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

165) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
166) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

522
  The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
523
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
 2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.575 The borrower should come forward with a detailed settlement proposal 10.575 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.

524
 10.576 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.576 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.577 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.578 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.579 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.577 The proposal should be examined in details by the Settlement
Advisory Committee.
10.580 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.578 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.581 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.579 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.580 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.581 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.167 These guidelines have been framed with a view to provide 1.167 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.168 The compromise should be a negotiated settlement under which 1.168 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)

525
 No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.84 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.84 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.250 Foregoing of lawyers fees and other legal, incidental charges. 4.84 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.251 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.252 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

526
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

sanction letter (excluding three days from the date of -do-
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS -do-
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and
lower plus 1%.
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.254 As far as possible proposal should provide for recovery of compromise

4.254 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.255 Post Dated Cheques may be obtained for the balance payment and
4.255 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.256 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.256 In case of consortium/co-financing of projects, sharing security on
pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
followed.

5. Other issues 5.167 In case of defaults on not adhering to installment deadlines penal 5.167 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.168 Right of forfeiture in case of persistent defaults despite fixation of 5.168 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.167 A Compromise Deed should be documented as per the advice of Legal 6.167 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.168 The Legal Department should ensure that all documents/ securities are 6.168 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

527
 7.3 Value of the security available including net worth of the borrowers/
guarantors.
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
7.4 Valuation of assets:-

 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

167) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
168) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change

528
  Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
529
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.582 The borrower should come forward with a detailed settlement proposal 10.582 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at

530
 the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.583 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.583 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.584 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.585 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.586 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.584 The proposal should be examined in details by the Settlement
Advisory Committee.
10.587 Details of One Time Settlement approved by MD shall be submitted to
10.585 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.588 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.586 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.587 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.588 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

531
S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification
o.
1. Aim/Objectives 1.169 These guidelines have been framed with a view to provide 1.169 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.170 The compromise should be a negotiated settlement under which 1.170 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

532
3. Cut-off-Date 3.85 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.85 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.253 Foregoing of lawyers fees and other legal, incidental charges. 4.85 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.254 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.255 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.257 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.257 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.258 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.258 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.259 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.259 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.169 In case of defaults on not adhering to installment deadlines penal 5.169 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.170 Right of forfeiture in case of persistent defaults despite fixation of 5.170 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

533
6. Legal 6.169 A Compromise Deed should be documented as per the advice of Legal 6.169 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.170 The Legal Department should ensure that all documents/ securities are 6.170 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

169) For NPAs over 5years as on the cut- off date

534
 & A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently-
100% of the Principal
170) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
535
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
No change
any two of the following conditions prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3 No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
 2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
CGM(DCCS), Member
CGM(PTS), Member
GM(PMES), Member
DGM(MS)/ (FS), Member
AGM(FS), Convenor
Sr Manager( Law), Member
536
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 Director (Finance) |
 Director(Technical) | (Senior Director will Chair the
Meeting)
 All HODs (Technical/F&A/Legal)
 Internal Auditors
 Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.589 The borrower should come forward with a detailed settlement proposal 10.589 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.590 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.590 The concerned dealing official from Technical Department shall

10.591 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.592 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.593 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.591 The proposal should be examined in details by the Settlement
Advisory Committee.
10.594 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.592 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.595 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.593 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.594 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.595 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.

537
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.171 These guidelines have been framed with a view to provide 1.171 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.172 The compromise should be a negotiated settlement under which 1.172 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the

538
 borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.86 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.256 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.257 Foregoing of penal interest/liquidated damages.
4.258 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.260 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
539
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.86 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.86 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.260 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
 in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.261 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.261 Post Dated Cheques may be obtained for the balance payment and
No change
interest, if any.

4.262 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.262 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.171 In case of defaults on not adhering to installment deadlines penal 5.171 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.172 Right of forfeiture in case of persistent defaults despite fixation of 5.172 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.171 A Compromise Deed should be documented as per the advice of Legal 6.171 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.172 The Legal Department should ensure that all documents/ securities are 6.172 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement
540
could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

171) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
172) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent No change
years
valuer is lower than the loan outstanding/security not created.
No change

541

Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
542
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
 Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.596 The borrower should come forward with a detailed settlement proposal 10.596 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.597 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.597 The concerned dealing official from Technical Department shall

10.598 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change

543
 Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.599 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.600 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.598 The proposal should be examined in details by the Settlement
10.601 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.599 Recommendations of the Settlement Advisory Committee shall be
10.602 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.600 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.601 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.602 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.173 These guidelines have been framed with a view to provide 1.173 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.174 The compromise should be a negotiated settlement under which 1.174 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which

544
 are delayed/ projects abandoned due to the reasons beyond the control of the securities are insufficient to cover the out standings and projects under
borrower. implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to remote.
No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent opportunity cost of delay in early recovery shall also have to be
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the considered For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.87 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.87 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.259 Foregoing of lawyers fees and other legal, incidental charges. 4.87 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.260 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.261 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-

545
 sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing -do-

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and -do-
lower plus 1%.
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.263 As far as possible proposal should provide for recovery of compromise

4.263 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.264 Post Dated Cheques may be obtained for the balance payment and
4.264 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.265 In case where One Time Settlement is considered based on the One Time
4.265 In case of consortium/co-financing of projects, sharing security on For more clarity.
Settlement of other financial institutions sharing security on pari-pasu basis,
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed.
LENDER also.

5. Other issues 5.173 In case of defaults on not adhering to installment deadlines penal 5.173 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.174 Right of forfeiture in case of persistent defaults despite fixation of 5.174 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.173 A Compromise Deed should be documented as per the advice of Legal 6.173 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.174 The Legal Department should ensure that all documents/ securities are 6.174 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

546
 7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.  Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT
Valuation of assets is an
approved Govt. Valuer.
important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

173) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
174) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more

547

B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
D : Settlement amount for specific Sectors :
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
548
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
  For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.603 The borrower should come forward with a detailed settlement proposal 10.603 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a

549
 certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.604 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.604 The concerned dealing official from Technical Department shall

10.605 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.606 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.607 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.605 The proposal should be examined in details by the Settlement
10.608 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.606 Recommendations of the Settlement Advisory Committee shall be
10.609 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.607 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.608 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.609 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.175 These guidelines have been framed with a view to provide 1.175 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the

550
 Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.176 The compromise should be a negotiated settlement under which 1.176 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.88 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.88 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of

551
 which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.262 Foregoing of lawyers fees and other legal, incidental charges. 4.88 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.263 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.264 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.266 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.266 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.267 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.267 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.268 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.268 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.175 In case of defaults on not adhering to installment deadlines penal 5.175 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.176 Right of forfeiture in case of persistent defaults despite fixation of 5.176 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.175 A Compromise Deed should be documented as per the advice of Legal 6.175 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.176 The Legal Department should ensure that all documents/ securities are 6.176 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered

552
 unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

175) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
176) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail

553

 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
554
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-

3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
 For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

555
10. Procedure 10.610 The borrower should come forward with a detailed settlement proposal 10.610 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.611 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.611 The concerned dealing official from Technical Department shall

10.612 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.613 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.614 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.612 The proposal should be examined in details by the Settlement
Advisory Committee.
10.615 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.613 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.616 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.614 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.615 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.616 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

556
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.177 These guidelines have been framed with a view to provide 1.177 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.178 The compromise should be a negotiated settlement under which 1.178 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred

557

2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.89 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.265 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.266 Foregoing of penal interest/liquidated damages.
4.267 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.269 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.270 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
4.271 In case where One Time Settlement is considered based on the One Time
558
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.89 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.89 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.269 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
4.270 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
 Settlement of other financial institutions sharing security on pari-pasu basis, 4.271 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.177 In case of defaults on not adhering to installment deadlines penal 5.177 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.178 Right of forfeiture in case of persistent defaults despite fixation of 5.178 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.177 A Compromise Deed should be documented as per the advice of Legal 6.177 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.178 The Legal Department should ensure that all documents/ securities are 6.178 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.

559
  Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

177) For NPAs over 5years as on the cut- off date A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal &
Where the financial position of the company has not improved
subsequently-100% of the Principal
178) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 Suits pending for the last 3 years.

 The company has never achieved cash break even

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.

B : Settlement amount : Amount below principal : 100% of the Principal outstanding.

1) For NPAs over 5 years as on the cut off date and, if any two of the following B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years following condition prevail:
 Suits pending for more than 5 years  Unit lying closed for more than 5years

 Suits pending for more than 5 years

 The company has never achieved cash break even

 The company has remained unimplemented for more than 3 years  The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent years No change
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created.
already provided for/ written off in the books of THE LENDER) No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change

560

C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
D : Settlement amount for specific Sectors :
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
561
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
 to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.617 The borrower should come forward with a detailed settlement proposal 10.617 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.618 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.618 The concerned dealing official from Technical Department shall

10.619 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.620 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.621 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.619 The proposal should be examined in details by the Settlement
Advisory Committee.
10.622 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.620 Recommendations of the Settlement Advisory Committee shall be

562
 placed before MD CMD for consideration and approval.
10.623 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.621 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.622 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.623 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.179 These guidelines have been framed with a view to provide 1.179 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.180 The compromise should be a negotiated settlement under which 1.180 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or

563

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.90 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.268 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.269 Foregoing of penal interest/liquidated damages.
4.270 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
564
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.90 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.90 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
 Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.272 As far as possible proposal should provide for recovery of compromise

4.272 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.273 Post Dated Cheques may be obtained for the balance payment and
4.273 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.274 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.274 In case of consortium/co-financing of projects, sharing security on
For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
followed.

5. Other issues 5.179 In case of defaults on not adhering to installment deadlines penal 5.179 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.180 Right of forfeiture in case of persistent defaults despite fixation of 5.180 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.179 A Compromise Deed should be documented as per the advice of Legal 6.179 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.180 The Legal Department should ensure that all documents/ securities are 6.180 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

565
 valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

179) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
180) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

566
  The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
567
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
  For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.624 The borrower should come forward with a detailed settlement proposal 10.624 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS

568
 amount proposed.
 Status of operation of the plant – Operational or
10.625 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.625 The concerned dealing official from Technical Department shall

10.626 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.627 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.628 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.626 The proposal should be examined in details by the Settlement
10.629 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.627 Recommendations of the Settlement Advisory Committee shall be
10.630 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.628 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.629 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.630 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.181 These guidelines have been framed with a view to provide 1.181 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.182 The compromise should be a negotiated settlement under which 1.182 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.

569
 Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.91 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.91 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.271 Foregoing of lawyers fees and other legal, incidental charges. 4.91 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.272 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

570
 4.273 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c). to the P & L A/c).
No change
4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount
deserving cases. which shall be charged as follows :
Modified to have more clarity
 No interest – if OTS amount is paid within 60 days from the date of
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter) -do-

 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
 Simple interest @ prevailing sector rate on reducing
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days. -do-
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment.
-do-
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days
from the date of dispatch of the sanction letter).
No change

4.275 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.275 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above No change

4.276 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.276 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
No change
4.277 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.277 In case of consortium/co-financing of projects, sharing security on
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed. For more clarity.

5. Other issues 5.181 In case of defaults on not adhering to installment deadlines penal 5.181 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.182 Right of forfeiture in case of persistent defaults despite fixation of 5.182 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.181 A Compromise Deed should be documented as per the advice of Legal 6.181 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.182 The Legal Department should ensure that all documents/ securities are 6.182 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change

571
 amount 7.2 If in operation, financial performance in the last three years.
No change
7.2 If in operation, financial performance in the last three years.

7.3 Value of the security available including net worth of the borrowers/
guarantors. No change
7.3 Value of the security available including net worth of the borrowers/
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
7.4 Valuation of assets:-
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

181) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
182) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

572

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
573
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
 applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.631 The borrower should come forward with a detailed settlement proposal 10.631 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

574
  Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.632 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.632 The concerned dealing official from Technical Department shall

10.633 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.634 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.635 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.633 The proposal should be examined in details by the Settlement
10.636 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.634 Recommendations of the Settlement Advisory Committee shall be
10.637 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.635 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.636 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.637 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

575
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.183 These guidelines have been framed with a view to provide 1.183 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.184 The compromise should be a negotiated settlement under which 1.184 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

576
3. Cut-off-Date 3.92 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.92 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.274 Foregoing of lawyers fees and other legal, incidental charges. 4.92 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.275 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.276 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.278 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.278 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.279 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.279 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.280 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.280 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.183 In case of defaults on not adhering to installment deadlines penal 5.183 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

577
 5.184 Right of forfeiture in case of persistent defaults despite fixation of 5.184 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.183 A Compromise Deed should be documented as per the advice of Legal 6.183 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.184 The Legal Department should ensure that all documents/ securities are 6.184 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

578
A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

183) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
184) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever

579
 is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
CGM(DCCS), Member
CGM(PTS), Member
580
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 Director (Finance) |
 Director(Technical) | (Senior Director will Chair the
 GM(PMES), Member Meeting)
DGM(MS)/ (FS), Member  All HODs (Technical/F&A/Legal)
AGM(FS), Convenor  Internal Auditors
Sr Manager( Law), Member  Legal Auditors
Internal Auditor, Member  Recovery Head, Convener.
Legal Auditor, Member

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.638 The borrower should come forward with a detailed settlement proposal 10.638 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.639 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.639 The concerned dealing official from Technical Department shall

10.640 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.641 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.642 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.640 The proposal should be examined in details by the Settlement
Advisory Committee.
10.643 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.641 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.644 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.642 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.643 Details of One Time Settlement approved by MD CMD shall be

581
 submitted to the Board for information.
10.644 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.185 These guidelines have been framed with a view to provide 1.185 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.186 The compromise should be a negotiated settlement under which 1.186 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural

582

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.93 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.277 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.278 Foregoing of penal interest/liquidated damages.
4.279 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
583
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.93 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.93 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
 4.281 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.281 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
the state of affairs of the borrower and subject to payment of interest No change
indicated in para 4.4 above

4.282 Post Dated Cheques may be obtained for the balance payment and 4.282 Post Dated Cheques may be obtained for the balance payment and
interest, if any. interest, if any. No change

4.283 In case where One Time Settlement is considered based on the One Time 4.283 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis, pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
the terms & conditions of the lead institutions may be followed by THE followed.
LENDER also.

5. Other issues 5.185 In case of defaults on not adhering to installment deadlines penal 5.185 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.186 Right of forfeiture in case of persistent defaults despite fixation of 5.186 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.185 A Compromise Deed should be documented as per the advice of Legal 6.185 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.186 The Legal Department should ensure that all documents/ securities are 6.186 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

584
 submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

185) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
186) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

585
  Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
586
 The company project has remained unimplemented for more than 3
years
No change
 Realizable value of the mortgaged assets as assessed by No change
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
 Action initiated under SARFAESI Act and is pending for 3 No change
years.
Amount below the principal outstanding(maximum to the extent of the No change
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date- No change
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at Deleted as no project in the
document rate or at present lending rate, whichever is lower. portfolio.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
 Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.645 The borrower should come forward with a detailed settlement proposal 10.645 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.646 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

587
 10.646 The concerned dealing official from Technical Department shall
10.647 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.648 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.649 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.647 The proposal should be examined in details by the Settlement
Advisory Committee.
10.650 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.648 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.651 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.649 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.650 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.651 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.187 These guidelines have been framed with a view to provide 1.187 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.188 The compromise should be a negotiated settlement under which 1.188 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

588
 (c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.94 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.94 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.280 Foregoing of lawyers fees and other legal, incidental charges. 4.94 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.281 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.282 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity

589
 deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

-do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing
-do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.284 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.284 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon
No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.285 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.285 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.286 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis,
the terms & conditions of the lead institutions may be followed by THE
LENDER also.
4.286 In case of consortium/co-financing of projects, sharing security on
For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
followed.

5. Other issues 5.187 In case of defaults on not adhering to installment deadlines penal 5.187 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.188 Right of forfeiture in case of persistent defaults despite fixation of 5.188 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.187 A Compromise Deed should be documented as per the advice of Legal 6.187 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.188 The Legal Department should ensure that all documents/ securities are 6.188 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

590
 7.4 Valuation of assets:-
7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT
important criteria for deciding the
approved Govt. Valuer.
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

187) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
188) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not

591

100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
592
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
 LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower. Settlement amount may be arrived at as follows:-

 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.652 The borrower should come forward with a detailed settlement proposal 10.652 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where

593
 balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.653 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.653 The concerned dealing official from Technical Department shall

10.654 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.655 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.656 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.654 The proposal should be examined in details by the Settlement
10.657 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.655 Recommendations of the Settlement Advisory Committee shall be
10.658 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.656 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.657 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.658 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

594
 o.
1. Aim/Objectives 1.189 These guidelines have been framed with a view to provide 1.189 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.190 The compromise should be a negotiated settlement under which 1.190 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.95 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

595
 NPA Date 3.95 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.283 Foregoing of lawyers fees and other legal, incidental charges. 4.95 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.284 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.285 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.287 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.287 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.288 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.288 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.289 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.289 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.189 In case of defaults on not adhering to installment deadlines penal 5.189 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.190 Right of forfeiture in case of persistent defaults despite fixation of 5.190 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.189 A Compromise Deed should be documented as per the advice of Legal 6.189 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

596
 6.190 The Legal Department should ensure that all documents/ securities are 6.190 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

189) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&

597

190) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
598
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
 the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower.
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

599
 (The decision of SAC shall be put up to the CMD)

10. Procedure 10.659 The borrower should come forward with a detailed settlement proposal 10.659 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.660 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.660 The concerned dealing official from Technical Department shall

10.661 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.662 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.663 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.661 The proposal should be examined in details by the Settlement
Advisory Committee.
10.664 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.662 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.665 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.663 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.664 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.665 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

600
 11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.191 These guidelines have been framed with a view to provide 1.191 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.192 The compromise should be a negotiated settlement under which 1.192 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood

601
 of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.96 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.286 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.287 Foregoing of penal interest/liquidated damages.
4.288 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
4.290 As far as possible proposal should provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.291 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
602
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.96 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.96 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
4.290 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above
4.291 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
 4.292 In case where One Time Settlement is considered based on the One Time
4.292 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis, For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed.
LENDER also.

5. Other issues 5.191 In case of defaults on not adhering to installment deadlines penal 5.191 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.192 Right of forfeiture in case of persistent defaults despite fixation of 5.192 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.191 A Compromise Deed should be documented as per the advice of Legal 6.191 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.192 The Legal Department should ensure that all documents/ securities are 6.192 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after

603

A : Settlement amount : 100% Principal outstanding
191) For NPAs over 5years as on the cut- off date
&
Where the financial position of the company has not improved subsequently-
100% of the Principal
192) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company has never achieved cash break even
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
604
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.
However, the following broad guidelines shall be followed :
A : Settlement amount : 100% Principal outstanding
No change
1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.
 Suits pending for the last 3 years.
 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change

C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
605
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
 alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.666 The borrower should come forward with a detailed settlement proposal 10.666 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.667 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.667 The concerned dealing official from Technical Department shall

10.668 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.669 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.670 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.

606
 10.668 The proposal should be examined in details by the Settlement
10.671 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.669 Recommendations of the Settlement Advisory Committee shall be
10.672 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
No change
10.670 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.671 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.672 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.193 These guidelines have been framed with a view to provide 1.193 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.194 The compromise should be a negotiated settlement under which 1.194 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to

607
 revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered.
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
considered
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.97 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.97 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.289 Foregoing of lawyers fees and other legal, incidental charges. 4.97 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.290 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.291 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

608
  beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
-do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory.

Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.293 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.293 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.294 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.294 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.295 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.295 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.193 In case of defaults on not adhering to installment deadlines penal 5.193 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.194 Right of forfeiture in case of persistent defaults despite fixation of 5.194 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.193 A Compromise Deed should be documented as per the advice of Legal 6.193 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.194 The Legal Department should ensure that all documents/ securities are 6.194 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of

609
 secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

193) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
194) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the

610
  Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
611
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
years No change
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.673 The borrower should come forward with a detailed settlement proposal 10.673 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.

612
  The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.674 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.674 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.675 This proposal should be examined in details by the Settlement Advisory No change
Convener of SAC alongwith the detailed background note
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.676 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.677 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.675 The proposal should be examined in details by the Settlement
Advisory Committee.
10.678 Details of One Time Settlement approved by MD shall be submitted to
10.676 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.679 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.677 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.678 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.679 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.195 These guidelines have been framed with a view to provide 1.195 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.196 The compromise should be a negotiated settlement under which 1.196 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

613
2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.98 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.98 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.292 Foregoing of lawyers fees and other legal, incidental charges. 4.98 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.293 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

614
 4.294 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing -do-

 beyond 60 days upto 240 days at present lending rate on simple interest
balance basis from the date of sanction letter , if OTS
basis from the date of sanction.
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
-do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.296 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.296 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.297 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.297 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.298 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.298 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.195 In case of defaults on not adhering to installment deadlines penal 5.195 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.196 Right of forfeiture in case of persistent defaults despite fixation of 5.196 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.195 A Compromise Deed should be documented as per the advice of Legal 6.195 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.196 The Legal Department should ensure that all documents/ securities are 6.196 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at

615
 compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount 7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/
guarantors. No change
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

195) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
196) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

616
  Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
100% of the principal
B : Settlement amount : Amount below principal :
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company has never achieved cash break even
 The company has remained unimplemented for more than 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
617
 The company project has never achieved cash break even No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
100% of the Principal outstanding.
B : Settlement amount : Amount below principal :
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Unit lying closed for more than 5years
 Suits pending for more than 5 years
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3 No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
No change
 In case security is not created.
 Action initiated under SARFAESI Act and is pending for 3
No change
years.
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
 D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at than Grid connected)/MSW and SPV which is not being financed by THE
document rate or at present lending rate, whichever is lower. LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
 For NPAs between 2-5 years old-100% of the Principal. Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
 For NPAs over 8 years old-50% ot the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.680 The borrower should come forward with a detailed settlement proposal 10.680 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

618
  The valuation of mortgaged assets.
 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.681 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.681 The concerned dealing official from Technical Department shall

10.682 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.683 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.684 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.682 The proposal should be examined in details by the Settlement
10.685 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.683 Recommendations of the Settlement Advisory Committee shall be
10.686 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.684 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.685 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.686 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

619
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.197 These guidelines have been framed with a view to provide 1.197 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.198 The compromise should be a negotiated settlement under which 1.198 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

620
 Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.99 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.99 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.295 Foregoing of lawyers fees and other legal, incidental charges. 4.99 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.296 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.297 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.299 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
state of affairs of the borrower and subject to payment of interest indicating
in para 4.4 above.
4.299 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon No change
the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.300 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.300 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.301 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.301 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.197 In case of defaults on not adhering to installment deadlines penal 5.197 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is

621
 interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.198 Right of forfeiture in case of persistent defaults despite fixation of 5.198 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.197 A Compromise Deed should be documented as per the advice of Legal 6.197 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.198 The Legal Department should ensure that all documents/ securities are 6.198 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

622
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

197) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
198) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

623

100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:-
Power Director(Finance), Chairman.
Director(Technical),Member
624
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower. No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :
Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
of the following:-
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.687 The borrower should come forward with a detailed settlement proposal 10.687 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.688 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.688 The concerned dealing official from Technical Department shall

10.689 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.690 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.691 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.689 The proposal should be examined in details by the Settlement
Advisory Committee.
10.692 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.690 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.693 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.691 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

625
 10.692 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.693 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.199 These guidelines have been framed with a view to provide 1.199 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.200 The compromise should be a negotiated settlement under which 1.200 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower

626

2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also
have to be considered.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal.
3. Cut-off-Date 3.100 A cut off date for the purposes of compromise should be ascertained.
This may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
NPA Date
4. Re-payment 4.298 Foregoing of lawyers fees and other legal, incidental charges.
Terms
4.299 Foregoing of penal interest/liquidated damages.
4.300 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c).
4.4 Repayment of settlement amount on installments may be considered in
deserving cases.
 free of interest if paid within 60 days from date of approval. .
 beyond 60 days upto 240 days at present lending rate on simple interest
basis from the date of sanction.
 beyond 240 days at documented rate/present lending rate which ever is
lower plus 1%.
Provided, a down payment of 25% of the settlement amount in mandatory.
627
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of Pending Court cases including action initiated under
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
considered
For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.
A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of
interest/principal and the default continues.
3.100 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.
4.100 Foregoing of lawyers fees and other legal, incidental charges No change
4.2 Foregoing of additional interest/liquidated damages. No change
4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c).
4.4 Repayment of settlement amount on instalments may be considered on
case to case basis subject to payment of interest on OTS amount Modified to have more clarity
which shall be charged as follows :
 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
dispatch of the sanction letter)
 Simple interest @ prevailing sector rate on reducing -do-
balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.
Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).
 4.302 As far as possible proposal should provide for recovery of compromise
4.302 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.303 Post Dated Cheques may be obtained for the balance payment and
4.303 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.304 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.304 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.199 In case of defaults on not adhering to installment deadlines penal 5.199 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.200 Right of forfeiture in case of persistent defaults despite fixation of 5.200 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.199 A Compromise Deed should be documented as per the advice of Legal 6.199 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.200 The Legal Department should ensure that all documents/ securities are 6.200 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

628
  The inspection of the secured assets shall be carried out before
submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

199) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
200) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

629

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is
lower.
3) Cases likely to become NPA at the end of the relevant previous year/ projects
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower-
100% of the Principal+ Simple Interest at document rate or at present lending
rate, whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:-
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-100% of the Principal.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs over 8 years old-50% ot the Principal.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
630
 The company project has never achieved cash break even
 The company project has remained unimplemented for more than 3
No change
years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
 In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years. No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
C : Settlement amount : 100% Principal + Simple Interest :
1) For NPAs over 3 years and less than 5 years.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
No change
2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :
1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs above 5-8 years old-50% of the Principal outstanding.
 For NPAs over 8 years old-25% of the Principal outstanding.
2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
 third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.694 The borrower should come forward with a detailed settlement proposal 10.694 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.695 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

631
 10.695 The concerned dealing official from Technical Department shall
10.696 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note No change
(covering proposal of the borrower, eligibility as per THE
10.697 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.698 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.696 The proposal should be examined in details by the Settlement
10.699 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.697 Recommendations of the Settlement Advisory Committee shall be
10.700 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.698 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.699 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.700 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.201 These guidelines have been framed with a view to provide 1.201 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.202 The compromise should be a negotiated settlement under which 1.202 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change

632
 And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and proj