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CONTENT

1. SFCs act and R.F.C. Profile 1

2. Loan appraisal Terms and Conditions 5

2.1. Steps to avail the loan 6

2.2. Term loan assistance 7

2.3. Interest rate structure 10

3. Loan schemes 15

4. Loan schemes for good borrowers 47

5. Disbursement 62

6. Case study 66

7. Conclusion and Recommendation 73

8. Bibliography 74
SFC ACT

&

RFC PROFILE

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SFC Act-

After independence India’s condition was not very good in terms of industrial
development and employment generation. For solution of this problem SFC act was
established. It was passed by parliament Act in 1951 and came into force on August 1 st,
1952.According to which every state will have a financial institution which will provide
funds for industrial development. This Act makes elaborate provision on the scope,
objectives, functions and nature of assistance that the State Financial Corporation can
give and the restriction on their lending institutions. According to it 17 State Financial
Corporation were established but due to not proper management of NPAs 15 State
Financial Corporation were closed, only 2 SFCs are still in function these are-
1) Rajasthan Financial Corporation &
2) Andhra Pradesh Financial Corporation.

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RFC profile
The Rajasthan Financial Corporation (RFC) was constituted under a notification of the
State Government Ltd. 17 January, 1955 under the SFCs Act-1951, for providing long
term financial support to tiny, small scale and medium scale industries in the State of
Rajasthan.
The Corporation is continuing to work as a Catalyst of development for translating into
practice the industrial policies and priorities of the Central and the State Governments as
also for providing and improving upon immediate assistance in the planned and balanced
development of industries in the State, particularly in the small and tiny sectors.
Rajasthan Financial Corporation has been striving incessantly towards its Goal - that of
extending a helping hand to varied entrepreneurial section of society for their financial
requirements. A Goal, ultimately aimed at spurring up the process of industrialization of
its parent State.
For the fulfillment of its prime objective it operates various loan schemes for the tiny,
small and medium scale industries, many of them tailor-made for specific entrepreneurial
classes.
Ever prepared to adopt as well as to adapt itself to the changing industrial needs, RFC has
over the period, widened its network, multiplied its numerous schemes and added
multifold to its policies and incentives, liberalizing them with the need of the hour.
Objective and functions of RFC-
RFC is authorized to carry on &agreement as may be agreed upon:
1) Guaranteeing on such terms and agreements as may be agreed upon:
a) Loan rose by industrial concerns which are repayable in a period not exceeding 20
years and floated in public market.
b) Loan raised by industrial concerns from scheduled banks or co-operative banks.
2) Acting as an agent of state Govt. or central Govt. or the developmental banks or the
industrial finance corporation of India for capital investment subsidy and interest Free
State tax loan or any other matter connected with or arising out of grant of loans or
advances to industrial concerns.

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5
LOAN APPRAISEL

TERMS

AND

CONDITIONS

6
STEPS TO AVAIL THE LOAN

• Constitute the firm/company and get it registered with concerned


authority.
• Identify/Select the project.
• Acquire a piece of land after selecting the site from RIICO or other
concerned agency. If the land is agriculture, conversion order for industrial
purpose may be obtained from the competent authority.
• Prepare project report.
• File the application for loan in the prescribed format along with requisite
fee and required information/documents as detailed in the application form. The
application may be obtained from Branch offices situated throughout Rajasthan,
HO at Jaipur, Public Relation Office, Bikaner House, Delhi.
• Attend the PC&CC /IPC meeting on receipt of information from the
Corporation. This meeting is convened almost every week preferably on
Wednesday.
• Principle clearance on loan proposal is given within a week’s time during
discussions in the PC&CC/IPC.
• Detailed appraisal is taken up by the appraisal team quickly after principle
clearance of the case from PC&CC/IPC and loan is sanctioned normally within
one month’s time. However, Co-operation from the entrepreneur with regard to
furnishing the information/documents is expected for quick appraisal.
• After appraisal, the case is sanctioned and sanction is conveyed after
deposition of service charges.
• Comply with the conditions stipulated in the sanction letter and complete
the formalities for execution of loan documents.
• After execution of loan documents, disbursement of token amount and
loan against land is released.

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• Disbursement of loan would be released in instalments on creation of
fixed assets and after verifying the investment made; by the Technical Officer of
the Corporation.

Note: The entrepreneur/promoter may personally represent the case or otherwise may
authorise any person/consultant to represent the case on behalf of promoter by furnishing
power of Attorney in the prescribed format. However, presence of promoter in person is
required while discussing important issues and finalising the case in the project
clearance and consultative committee (PC&CC) and while executing the documents.
quirements.

Term Loan Assistance:

* Purpose
* Norms of Financing
* Security/ Mortgage of Assets
* Nature of Mortgage
* Personal Guarantee and Collateral Security
* Security Margin
* Interest Rate
* Period of Repayment
* Favorable Indicators

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

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Norms of Financing:

1. Minimum promoter's contribution: The Corporation stipulates a condition of


minimum promoter's contribution which is presently 33% of the project cost. It may be
suitably increased on case to case basis considering various factors of the project.

2. Debt Equity Ratio(DER): Not to exceed 2:1 in any case. However, the Corporation
normally allows maximum DER of 1.8:1.

3.Debt Service Coverage Ratio(DSCR) : Not below 1.7:1

Security/ Mortgage of Assets:

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

Nature of Mortgage:

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

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Personal Guarantee and Collateral Security:

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

Security Margin:

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

Interest Rate Structure:

A glance at the chart given below will show the prevailing rate of interest applicable in
your case. The interest rates are subject to change from time to time.

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INTEREST RATE STRUCTURE EFFECTIVE FROM 01.06.2010

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


PROJECT

S. NAME OF THE SCHEME RATE OF


No. INTEREST
1. SME Sector Units (Industrial & Service Sector) Upto Rs. 50,000/. 10.75%

2. SME Sector Units (Industrial projects) above Rs. 50,000/- & upto 12.50%
Rs. 20.00 Crores.
3. a) Scheme for Financing Against Assets 15.00%

b)“Scheme for Financing for Builders/commercial /residential 17.00%


complexes/ Multiplexes, Hotels, Hospitals etc. for purchase of
land & building”

14.00%
b)Saral Scheme for SME sector
4. Construction of Commercial /Residential Complexes 14.75%
5. a) Service Sector projects (excluding S.No. 3 to 4) and including 12.50%
Hotels, Technical/ Professional Education Projects
b) Tourism Projects (except hotel projects), Guest-House cases,
Hospitals/ Nursing Home Projects and Medical Equipment
13.25%
Scheme cases

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APPLICABLE FOR GOOD BORROWER SCHEMES :

S. NAME OF THE SCHEME RATE OF


No INTEREST
1. a) Short Term Loan Scheme (STL), Working Capital Term Loan 11.50%
Schemes (WCTL), Special Purpose Working Capital Term Loan
Scheme (SPWCTL).

11.25%
b) Units Promoted By Good Borrower (UPGB)
2. Working Capital Term Loan to Non Assisted Units 13.00%
3. Platinum Card Scheme 11.50%
4. Gold Card Scheme 11.75%

NOTES :-

In case of loans upto Rs. 5.00 lacs to SC/ST entrepreneurs the rate of interest shall be 2% less than
1. the rate of interest applicable to other entrepreneurs in terms of PG circular No. 535 dated 7th Aug.,
1993.
2. In case of loans upto Rs. 5.00 lacs, to disabled persons, a firm in which disabled person is partner
having majority (not less than 51%) share, the rate of interest shall be 2% less than the rate of
interest applicable to other entrepreneurs.
3. Liquidated damages in case of default shall be charged on amount in default for the period of default
at rates applicable prescribed by Corporation from time to time. No interest would be charged on the
liquidated damages. However, the mode of appropriation of receipts shall remain uncharged.
4. Interest on rehabilitation cases is to be charged as per the guidelines issued by the Reh. Cell.
5. In all cases Post Dated Cheques for equated quarterly / monthly installments are to be
obtained as per PG circular No. 1307 dated 28.01.2010. Cheques shall be taken for EQI/EMI based
on documented rate of interest. It should be clearly stipulated that EQI/ EMI has been calculated on
documented rate of interest. In case cheque is not realized, the BO shall ask the borrower for

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enhanced amount of EQI/ EMI by including applicable rate of liquidated damages.

6. a) No processing charges shall be levied under Card Loan Schemes under Good Borrowers.

b) Processing Charges in all the GBD schemes shall be 0.75% of sanctioned loan amount except
Card Loan Schemes, as per P&G circular No. 1256 dated : 30.03.2009.
7. a) In the loan cases where the exposure is upto Rs.5.00 Crores (including existing outstanding
loan amount and proposed sanction amount) and are considered under UPGB and STL Scheme of
Good Borrowers, Scheme for Financing Against Assets, Fast Track Loan Scheme for existing
borrowers under FAAS (commercial/ residential property) and Saral Scheme for SME Sector the
documented rate of interest, after three years (from the date of first disbursement) shall be the
prevailing rate of interest at that time or the existing rate of interest whichever is higher.

b) In all the loan/ GB cases where the exposure exceeds Rs.5.00 Crores (including existing
outstanding loan amount and proposed sanction amount), the documented rate of interest shall be
reset after every 12 months during the currency of loan from the date of first disbursement and the
Corporation shall charge rate of interest prevailing at that time or existing rate of interest, whichever
is higher.

INTEREST ON FLAT RATE BASIS

The Corporation shall also provide financial assistance @ 7% (Flat Rate) for entire
repayment period based on equated monthly installments. The minimum repayment
period would be 5 years ( with six to 12 months moratorium period) with a clause of
premium @ 5% on outstanding balance on prepayment. In case of default, the
Corporation shall charge interest @ 12% p.a. on the amount in default and for the period
of default. This system of flat rate interest shall be applicable in all schemes w.e.f.
01.06.2004.
Other parameters like promoter’s contribution, security margin, Debt Equity Ratio,
maximum repayment period, etc. which are followed under Normal/ general Loans

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Schemes/ GB Schemes shall also be applicable.No rebate for timely payment as
available in other loan schemes of the Corporation shall be available.
If any prospective borrower approaches the Corporation for availing financial assistance
under this FLAT RATE SYSTEM, initially the financial assistance shall be considered
at HO only.

Period of Repayment:

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

Favourable Indicators:

While examining the applications approvals are granted considering the following
favourable indicators. In case of new promoters the appraisal is done carefully to assess
the viability of the project:

1. Promoters should already have industrial experience either in the same


industry or in some other industry.
2. Promoters with high net worth and having adequate investible funds.
3. Promoters disclosing high total income in their income tax returns.
4. Promoters having good past track record with the Corporation with satisfactory
dealings.
5. Promoters should have invested heavily in the proposed project of their own without
waiting for Corporation's assistance.

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6. Units where there is a firm tie-up arrangement for sale of the goods or who have
experience of bulk exports.
7. Promoters having adequate financial resources and setting up a 50% EOU/
infrastructure projects.

LOAN SCHEMES

Hospitals/Nursing Homes

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Under the scheme, financial assistance upto a maximum of Rs.20.00 Crores, depending
upon the constitution of applicant unit is made available. The Hospitals/Nursing Homes
should have minimum of 20 beds. One of the pre-condition for the project under the
scheme is that services of atleast one expert doctor having post graduate qualifications
like MD/MS should be available in Hospital/Nursing Home on full time basis.
Hospital/Nursing Home is also required to provide medical assistance at concessional
rates to patients from low income group. The financial assistance would cover investment
in land, hospital building, electro-medical equipments, instruments, hospital furniture,
air- conditioners, small generators etc. Under the Scheme, financial assistance is also
extended to existing hospitals for expansion/modernisation.

Repayment Schedule

Keeping in view the fact that the hospital and nursing homes will take time to establish its
name and market.

The repayment of loan shall be kept as five years excluding moratorium period which
would be granted in addition to five years depending upon the implementation period

II.TOURISM RELATED ACTIVITIES

The Corporation has been granting financial assistance for Hotels, Restaurants, Drive-in-
Cinemas, Multiplexes and Tourism related activities in Rajasthan.

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Purpose

Assistance under the scheme is available for acquisition of following fixed assets and
facilities depending upon the type of activities:

a)Land, Building, Kitchen equipments, Office equipments including telecommunication


network, air-conditioners, Interior decoration, Furniture & Fixtures, Conference Hall,
Health Club, Swimming Pool, Indoor sports facilities, Shopping Arcade, Garden
equipments etc.

b)In case of restaurants set-up in commercial premises, assistance is available to acquire


own premises.

Repayment Schedule

Keeping in view the fact that the tourism related project will take time to establish its
name and market.

The repayment of loan shall be kept as five years excluding moratorium period which
would be granted in addition to five years depending upon the implementation period.

III.COMPOSITE LOAN SCHEME

Rural artisans and craftsmen and all eligible small industrial activities in Villages, Small
towns having total credit requirement not exceeding Rs.50,000/- inclusive of working
capital are covered under the scheme.

IV.SINGLE WINDOW SCHEME

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The corporation has been operating the scheme especially for small borrowers to ensure
adequate finance by providing single window facility for availing of Term Loan for
fixed assets and Working Capital finance from one institution only.

The salient features of the scheme are as under :

- Assistance is available to tiny and small scale industrial units whose cost of
project(excluding working capital margin ) and total working capital requirement is
within Rs.200.00 Lac.

- Collateral security to the extent of 150% of term loan for working capital would be
required.

- Component of working capital normally should not exceed to the term loan for fixed
assets.

- The loan shall be repayable within a period of not exceeding 10 years with moratorium
period of 18 to 36 months.

- Designated bank may agree to take over the working capital account within three years.
In cases where the bank agrees to finance only additional working capital, the
corporation may continue the earlier working capital loans against the specified security.

V. SCHEME FOR QUALIFIED PROFESSIONALS

Under the scheme, assistance is granted to qualified professionals for setting up their
first consultancy venture.

Eligibility

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Assistance under the scheme is granted to qualified professionals in the field of
management, accountancy, medicine, architecture, engineering, law etc. for setting up
professional practice/consultancy ventures for the first time. Assistance to a limited
extent for acquiring additional equipments for their practice could also be considered
under the scheme in case of the existing established professional firms.

Cost of Project

The cost of the project should be need-based and not exceeding Rs.20.00 Lac. It may
include cost of land, building, furniture, fixtures and equipment related to the profession.
The cost of land and building should not exceed 50% of the total outlay.

Repayment Period

Five years including initial moratorium not exceeding one year

Other terms & conditions

The applicant should devote his direct and full attention towards his proposed profession
/self-employment venture. The premises acquired under the scheme should be used
exclusively for professional purposes and not as residence-office.

VI SCHEME FOR TEXTILE INDUSTRY UNDER TECHNOLOGY


UPGRADATION FUND(RTUF)

To provide encouragement to textile industrial units in the small scale/medium scale


sector for taking up technology upgradation and to modernise their production facilities.

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Incentive

The scheme envisages interest incentive of 5% points on the loans availed by small
scale/medium scale units for under taking technology upgradation / modernization,
however, for the spinning machinery the reimbursement will be four percentage points
only.

The scheme will continue to provide a reimbursement of five percentage points


1 on the interest charged by the lending agency on a project of technology
upgradation in conformity with the Scheme. However, for the spinning
machinery the reimbursement will be four percentage points only.
2 The scheme will continue to provide cover for foreign exchange rate fluctuation
not exceeding 5%. However, for the spinning machinery the coverage will be
4%.
3 The Scheme will now provide an additional option to the power-looms units to
avail of 20% Margin Money Subsidy under TUFS in lieu of 5% interest
reimbursement on investment in TUF compatible specified machinery subject to
a capital ceiling of Rs. 200.00 lakh and ceiling on margin money subsidy Rs.
20.00 lakh. A minimum of 15% equity contribution from beneficiaries will be
ensured.
4 The Scheme will now provide 15% Margin Money Subsidy for SSI textile and
jute sector in lieu of 5% interest reimbursement on investment in TUF
compatible specified machinery subject to a capital ceiling of Rs. 200.00 lakh
and ceiling on margin money subsidy Rs. 15.00 lakh. A minimum of 15% equity
contribution from beneficiaries will be ensured.
5 The Scheme will continue to provide 5% interest reimbursement plus 10% capital
subsidy for specified processing machinery.
6 The Scheme will now provide 5% interest reimbursement plus 10% capital
subsidy for specified machinery required in manufacture of technical textiles and
garmenting machineries. (However, the units which have taken the sanction prior
to 31.03.2007 but not started the commercial production, to be certified by

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Chartered Engineer and Chartered Accountant, will be covered under the
modified Scheme).
7 The Scheme will now provide interest subsidy/ capital subsidy/ Margin Money
subsidy on the basic value of the machineries and exclude the tax component for
the purpose of valuation in view of the decision for non- subsidizing the taxes.
8 The Scheme will provide 25% capital subsidy on purchase of the new machinery
and equipments for the pre-loom and post-loom operations, handlooms/ up-
gradation of handlooms and testing & Quality Control equipments, for handloom
production units.
9 Certain imported second hand machinery have been permitted. The entire range
of imported second hand machinery will now be ineligible under the Scheme for
any benefit except automatic shuttleless looms with the value cap of Rs. 8.00
lakh per machine and 10 years vintage and with a residual life of minimum 10
years.
10 Other investments such as energy saving devices, effluent treatment plant, in-
house R&D, IT including ERP, TQM including adoption of ISO/ BIS standards,
CPP etc. ( including non-conventional sources) as mentioned in Para 3.3(2) of the
existing Scheme will now be eligible for benefits of the Scheme only upto 25%
of the cost of machinery.
11 For a specific thrust to garmenting, machineries for CAD, CAM and design
studios and likes will be included in the separate heading of the guidelines of the
scheme with a financial cap to be determined by the Inter Ministerial steering
Committee (IMSC) under the Chairmanship of Secretary(Textiles).
12 Investments like land, factory building, pre-operative expenses and margin
money for working capital will now be ineligible for benefit of reimbursement
under the scheme except meant for apparel sector and handloom with existing
50% cap. In case apparel unit is engaged in other activity, the eligible investment
under this head will only be related to plant and machinery eligible for
manufacturing of apparel.
13 The applicability of the modified provisions of the Scheme will be reckoned with
the date from sanction of bank loan or commercial production, whichever is later.
The date of indenting of machineries or procurement or import or delivery shall

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be immaterial to decide the applicability of the Scheme.

Scope of the Scheme

The following activities will be covered under RTUF:

i) Cotton Ginning and Pressing .


ii) Wool Scouring combing & carpet industry .
iii) Silk reeling and twisting .
iv) Synthetic filament yarn texturising, crimping and twisting .
v) Spinning .
vi) Viscose filament yarn .
vii) Weaving, knitting including non-woven fabric embroidery.
viii) Garment/Made up manufacturing .
ix)Processing of fibers, yarns, fabrics, garments and made ups.
x) Technical Textiles including non wovens.

Operating period of the scheme

The scheme would be in operation from 01.11.2007 to 31-03.2012

Promoter's Contribution
Minimum 33% of the project cost

Rate of Interest

The Corporation shall charge interest rate as applicable from time to time under the
scheme.

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VII.ASSISTANCE FOR ACQUISITION OF ISO-9000 SERIES

Objective

This scheme has been introduced to promote & encourage adoption of quality
management system in SSI units with a view to strengthen their marketing ability and to
enable them to acquire export capabilities . SSI units which have proven record of past
performance are eligible for assistance, if they :

- Have been in operation for a period of atleast two years.

- Have earned profit and/or declared dividend during the preceeding two financial years.

- Not be in default to institutions/banks in payment of their dues.

Purpose

Expenses on consultancy, documentation, audit, certification fees, equipments and


calibrating instruments required would be taken in to account for determining the loan
requirement.

Period of Repayment

Normally not exceeding 5 years including moratorium upto one year.

VIII.SCHEME FOR FINANCIAL ASSISTANCE FOR COMMERCIAL


COMPLEXES, SHOW ROOMS AND SALES OUTLETS

Objective

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To provide financial assistance for construction of commercial complexes, showrooms
and sales outlets independent of hotel business.

Eligible Activities

Construction of Commercial complexes, showroom(s) & sales outlets providing


infrastructure facilities like Electricity, Water, Sanitaryware, Telephones, Internet, E-
Commerce, Lift, Air-conditioners and Cooling, Parking, Storage etc.

Amount of Loan

Amount of loan would be need based within the normal financing ceiling of the
corporation, which is presently upto Rs. 2000.00 Lac.

Promoter's Contribution
Minimum 40% of the project cost

Rate of Interest
As applicable from time to time

Other terms and conditions


1. The commercial complex, show-room/sales outlets must be established at prime
location/main market centres.
2. Map of commercial complexes etc. shall be got approved from the local authority as
per norms.
3. The commercial complexes after construction may be disposed of/leased out in part.
However, atleast 25% of the area of the complex is to be retained by the borrower with
clear demarcation and it would neither be disposed of nor shall be leased out. The
borrower may, however, carry out any of his commercial activity in such retained area.

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The area, retained, as such shall be in addition to the common facilities. The retained
area should have easy and proper access to the common facilities like lift, stair cases,
utilities etc.

The borrower may, retain more than 25% area of the complex, if he so desires and
found it viable.

NOTE :In case the borrower intends to carry any commercial activity in the retained
area like setting up of Cyber cafe, Photostat Machine, STD/ISD/PCO, Restaurants etc.
which are eligible for financing as per norms of the Corporation, the same may also be
considered for financing in the respective scheme.

4. In case of leasing out of any part of the commercial complex, the same will be leased
out with the condition that the leasee/tenant will directly deposit the rent/lease money
with the Rajasthan Financial Corporation as and when the rent/lease money is
demanded by Rajasthan Financial Corporation.

5. In case of selling out any area of commercial complex the loanee/borrowers who are
regular in meeting their obligation shall require to deposit the amount equal to the
average rate of construction per Sq. Ft. considered in the project/scheme appropriating
investment proposed to be made in the common facilities, plant and machinery and
MFA etc.

IX.SCHEME FOR FINANCIAL ASSISTANCE FOR INFORMATION


TECHNOLOGY

Objective

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To promote all type of projects/activities related to Information Technology. However,
Educational/Training Institutes shall be outside the purview.

Eligible Activities

a) All activities related to Information Technology Sector including Cyber Cafe,Internet,


E-commerce, Software development etc. except that of the Educational/Training
Institutes (School/colleges etc. ) Software Development may be off shore packages. Off
shore services to cater the export sector. The activities like Data Processing,
Consultancy, Turnkey projects, Product & Package etc. and also any other activity
related to this sector may be considered on their merits.

b) Assistance may also be given under the scheme for development of infrastructure
related to the Information Technology.

Promoter's Contribution
Minimum 40% of the project cost

Repayment for Loan


The amount shall be repayable within 6 years including moratorium period of 12
months.

Margin of Security

30%
- Land and Building
- Plant & Machinery i.e. Hardware, Software and other 40%
equipments

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- Registration fee 50%

Rate of Interest

As applicable from time to time under the Scheme .

Collateral Security

Collateral Security against plant and machinery (hardware & software) and also against
fee etc. shall be required.

X.SCHEME FOR FINANCING TO MINING EQUIPMENT/INDUSTRY

Objective

To provide adequate loans to mine owners for faster and better development of mineral
properties.

Eligibility

a) The entrepreneurs, who are having valid mining lease for a sufficient area in the
name of the promoters/firm.

b) There should be proven mineral reserves of sufficient quantity and acceptable quality
in the area where mining lease rights have been obtained.

Purpose

For purchase of basic mining equipments, handling equipments, complimentary and


ancilliary equipments.

Security

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Besides primary security by way of hypothecation of plant and equipments, collateral
security to the extent of 100% of loan amount and mortgaging of mining lease deed, if
any.

Promoter's Contribution
Not less than 40%.

Margin of Security

40%.
For Mining equipments
For civil construction(like woods, drainage, removal of over- 50%
burden and quarry improvement etc. ).

Interest Rate

As applicable from time to time under the scheme.

XI. SCHEME FOR WORKING CAPITAL BRIDGE LOAN

Objective

To provide Bridge loan facilities to the units to meet out their working capital
requirement at the initial stages of production, till such time working capital facilities are
made available to it by any bank on regular basis.

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Eligible Units

New/Existing tiny and small scale units, which are considered by the Corporation for
term loan and whose venture outlay i.e. aggregate cost of project(excluding working
capital margin ) and total working capital requirement does not exceed Rs.200.00 Lac.

Nature and Amount of Assistance

The term loan under this scheme shall be in the form of Bridge loan for a maximum
period of one year from the date of implementation of the project/date of disbursement of
first instalment of bridge loan as within this period, the unit is expected to arrange the
working capital facilities from any bank to meet out its regular working capital
requirement.

The amount of bridge loan would be need based, subject to maximum of 10% of the
projected turn over of the first year envisaged in the scheme. However, it would not be
more than the quantum of term loan proposed to be extended against the fixed assets.

Promoter's Contribution

Minimum 33% of the project cost(including working capital requirement), however, in


cases where higher promoter's contribution has been specified, the same would continue
to apply.

Rate of Interest

The rate of interest on working capital bridge loan shall be as applicable from time to
time for general term loans.

Security

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i) Primary Security

First charge as hypothecation on the current assets .

ii) Additional Security

First charge on the fixed assets financed by the Corporation .

iii) Collateral security to the extent of 150% of the working capital bridge loan. In
collateral security besides immovable properties, the securities of NSC/FDRs/IVPs etc.
on their face value and not on the maturity value may also be considered.

XII. SCHEME FOR DHABA

Purpose of Loan

a. For purchase of land, renovation/alteration of existing buildings and construction of


new buildings few(2-3) rooms for staying.

b. For Kitchen equipments & other equipments like Deep Freezer, Utensils, Fans,
Coolers, Gas Burners and Furniture etc.

Financial Assistance
Loan upto Rs.10.00 Lac will be considered.

Interest Rate

As applicable from time to time.

Other Requirements

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- Land should be converted for hotel purpose. Approval of building plan and NOC from
Local Authority are pre-requisite. If land is not converted, financial assistance only for
equipment and furniture may be considered against collateral security.

No financing in rented premises shall be considered.


i)
ii) Financing upto a term loan amount of Rs. 15.00 lacs may be considered as per
existing norms with the condition that marketable and mortgageable collateral
security of atleast 25% of the loan amount shall be furnished.
iii) For the loan amount exceeding Rs. 15.00 lacs, the Corporation may continue to
finance as per existing norms with need based marketable and mortgageable
collateral security.

XIII. SCHEME FOR FINANCING ACTIVITIES RELATING TO MARKETING


OF SSI PRODUCTS

Objective

To provide financial assistance to SSI units to undertake various activities necessary to


increase their sales turnover in the domestic and export market.

To finance service providers which provide support services and/or infrastructure


facilities to small scale sector to improve its marketing capabilities.

Eligible Borrowers

Existing SSI units in the small scale sector with a good track record and sound financial
position are eligible for assistance. New units could also be considered on a selective
basis.
Specialised organisations providing marketing assistance infrastructure and support

31
services to industrial concerns in the small scale sector.

Purpose

For undertaking various marketing related activities such as:-


- Marketing Research.
- Advertising .
- Establishing distribution net-work including showrooms/
retail outlets etc.
- Development of infrastructure like setting-up of
permanent exhibition centres including parks etc.
- Marketing support to SSIs like data bank, libraries,
internet services etc.

Rate of Interest

Interest rate as prevailing from time to time shall be charged.

Security

Exclusive charge over the assets acquired out of the loan first/second charge on existing
fixed assets and other collateral security as may be deemed necessary.

Period of Repayment

This may vary between three to five years with a moratorium upto one year for term
loans to SSIs. The period of repayment could be extended to 8 years for marketing related
infrastructure projects.

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XIV. SCHEME FOR PROVIDING FINANCIAL ASSISTANCE TO UNITS
INTENDING TO SWITCHOVER THEIR LOAN ACCOUNTS FROM BANKS
AND OTHER FINANCIAL INSTITUTIONS TO RFC
Eligibility

a)Cases having good repayment behaviour with their respective lending institutions and
having categorised as standard loan account.

b)Cases must comply with the eligibility norms for financing by the Corporation on the
lines of a fresh case.

c)Proposed term loan must be adequately secured and in any case, the quantum of
security should not be less than what has been offered to its banks/other financial
institutions.

Purpose of Assistance

(i) Financial Assistance for repayment of outstanding loan of the other FIs/ Banks.
(ii) For repayment of unsecured loan (excluding IFUL)/Creditors towards capital goods,
provided it does not dilute the norms of minimum promoter's contribution and debt
equity ratio.
(iii) For acquisition of further fixed assests for modernisation, diversification, expansion
etc.

Quantum of Loan

The loan will be restricted to the balance outstanding in the account of the unit with its
bank/Financial institution at the time of disbursement of the loan under the scheme.
Loan can be considered for additional assets also.

33
Repayment Period & other terms and conditions:

The case would be examined and processed as per normal parameters of the Corporation
followed/specified under General Term Loan Scheme.

XV. SCHEME FOR ASSETS FINANCING

The scheme envisages to provide financial assistance to the businessman/entrepreneurs


who are interested to purchase the assets of an existing unit from the prospective seller
who is no more interested in running the unit what so ever the reason may be.

Eligibility

A Company incorporated under Companies Act/A partnership firm/Proprietorship


concern will be eligible to avail financial assistance under this scheme.
ii) If the main promoter/concern had already availed any financial assistance from any
bank/financial institution, should have satisfactory track record of payment. Its accounts
should have been classified as standard assets with the financial institution/Bank.
iii) Weightage would be given to the promoter(s) who are already engaged in the
same/related industrial/trading activities.
(iv) The assets acquired/purchased within a period of 18 months prior to the date of loan
application may be considered for financial assistance.

Purpose of Assistance

A.For purchase of fixed assets as under:-


(i) Land : Only industrially converted land or land located in RIICO Industrial Area or
land which has been approved by local authorities
for commercial purposes.
(i) Building: Should be in good condition.
(ii) P&M and MFA: Should be in good condition and residual life not less than 10 years.
Note:The assets of sick/closed units acquired/to be acquired on cash down basis either

34
from the Corporation or otherwise would also be covered.
B. For addition of fixed assets to make the unit viable.
C. Working Capital - If the case fulfills the criteria of Single Window Scheme.

Amount of Assistance

From Rs. 2 lakhs to Rs.2000 lakhs (Rs.2000 lakhs in the cases of Companies and Rs. 800
lakhs in case of proprietorship, firm).

Margin
(1) 50% on the acceptable value or purchase consideration of assets whichever is less.

(2) Usual margin on additional fixed assets as per norms of financing.

Moratorium period

Since the loan is available against existing assets, the moratorium period shall not exceed
to 12 months in any case.

Repayment period

The repayment period shall be 5 years from the date of expiry of moratorium period. The
unit shall furnish 20 post dated account payee cheques favouring RFC for repayment of
loan in EQI with additional cheques for the interest of moratorium period.

Security

The requirement of security shall be two times of the financial assistance, the loan shall
be secured by the following securities:-
First charge over the fixed assets proposed to be purchased.

35
ii) Personal guarantee of all directors.
iii) In case loan required for additional fixed assets/working capital the concern will be
required to furnish security/collateral security as per norms of usual financing by the
Corporation.

Basis for calculation of acceptable value

The acceptable value of assets proposed to be financed shall be considered as under:-

LAND & BUILDING: For determining the value of land and buildings the purchase
price as per registered document can be taken into consideration.
PLANT & MACHINERY - Written down value or purchasing price/MRV whichever is
less.

Promoter's Contribution

Overall promoter’s contribution shall be over 40%

Rate of Interest

As applicable from time to time under the scheme.

Viability of the project

36
The financing of the assets acquired/proposed to be acquired would be considered only if
it is for a part of the project and is found technically feasible and economically viable in
terms of norms and guidelines made applicable under general loan scheme.

XVI. FAST TRACK LOAN SCHEME

Many promoters are confident about the successful running of their project and are
prepared to furnish additional/collateral security for the term loan for fixed assets which
provides extra comfort level to the Corporation. In such cases the Corporation has also
decided to reciprocate by providing financial assistance on liberal terms with regards to
promoter's contribution, security margin, all without diluting overall financing
norms/parameters laid down by the SIDBI/IDBI, Central/State Govt., RPCB etc. It has
also decided to simplify the procedure of disbursement as compared to the general
category of borrowers. This would not only facilitate early implementation of the project
but would also enlarge the scope of the business of the Corporation.

Eligibility criteria

The promoter/concern/company furnishing collateral security for the term loan against
fixed assets, would be eligible to be covered under the scheme. However, as a part of
specific decision/guidelines of Corporation where collateral security requirement is a
must, such as units in rented premises, mining units, transport loan cases, working capital
term loan under SWS, projects based on fast changing technology etc., shall remain
outside the purview of this scheme. The Scheme would be applicable to the loan cases
under General Loan Scheme, but NOT under Good Borrower Scheme/UPGB and NAU
Schemes.

Category of promoters

37
Under the scheme, promoters may be categorised as follows, based on the quantum of
collateral security proposed to be furnished for term loan against fixed assets:-

Quantum of collateral security

"A"

(i) Where the value of collateral security against fixed assets is more than 80%
of loan amount
Or
Where, in the project, the component of land and building is more than 50% of the total
investment towards fixed assets and collateral security is not less than 50% of the loan
amount.
Or
Where, in the service sector projects like hotel, commercial complex, hospital, nursing
homes, proposed to be located in major cities like Jaipur, Jodhpur, Udaipur, Ajmer and
Bikaner, the component of land and building is more than 75% of the total investment
towards fixed assets of the project and collateral security is not less than 25% of the loan
amount.

"B"

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(ii) Where the value of collateral security against fixed assets is mor than 40%
but upto 80%
Or
Where, in the project, the component of land and building is more than 50% of the total

investment towards fixed assets and collateral security is not less than 25% of the loan
amount.
Or
Where, in the service sector projects, like hotel, commercial complex, hospital, nursing
homes proposed to be located in major cities like Jaipur, Jodhpur, Udaipur, Ajmer and
Bikaner, the component of land and building is more than 75% of the total investment
towards fixed assets in the project and collateral security is not less than 10% of the loan
amount.

Note:

For the purpose of determining the value of collateral security, the value of primary
security would not be considered.

Prameters
The eligible entrepreneurs/cases would be entitled to sanction/avail loan on the liberal
terms/norms as detailed below:

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A. Facilities/relaxation in terms of sanction 'A' 'B'
- Minimum Promoter's Contribution 30%* 33%*
Security Margin
(a) where usual security margin is 30% 25% 27.5%
(b) where usual security margin is 40% 35% 37.5%
(c) where usual security margin is 50% 40% 45%
DSCR may be accepted 1.5:1 1.6:1
-However it should not dilute DE Ratio of 2:1 in small
scale units and 1.5:1 in meduium scale units.
B.Facilities/Relaxation in terms of disbursement of loan 'A' 'B'
- Raising of promoter's contribution before disbursement 50% 75%
- Advance disbursement 33% 25%
Maximum inspection for verification and Valuation of 2 times 3 times
assets

Note: The next advance disbursement would be subject to proper utilisation of previous
advance and would be over and above the admissible disbursement against valuation of
assets of the project. Beyond 66% disbursement against sanctioned loan amount, eligible
disbursement would be released after carrying out valuation only.
Other relaxations
a) Credit reports from reputed persons/Gazetted Officer would not be insisted upon if
satisfactory report from Bank has been received.
b) Cases would be taken up for processing/sanction without waiting for NOC/consent

from RPCB and the unit would be allowed to furnish the same as under:
NOC in 'red category' cases would be furnished before first disbursement of loan
(after documentation and release of token money).
In 'orange category' cases, the same may be furnished uptil disbursement of 25% of
sanctioned loan or disbursement of 50% value of collateral security, whichever is less.
Payment/Receipts for smaller amount in case of plant and machinery and MFA
would not be insisted upon to the extent of 10% of the total cost of plant and machinery

40
and MFA. For such payment only a statement showing the itemwise details of payments
duly signed by the promoter and certified by CA shall have to be furnished.

XVII. SCHEME FOR FINANCIAL ASSISTANCE TO INDUSTRIAL CONCERNS


INVOLVED IN COMMERCIAL CONSTRUCTION ACTIVITIES FOR
DEVELOPMENT OF RESIDENTIAL HOUSES/FLATS/HOUSING COMPLEX

OBJECTIVES
To provide financial assistance on commercial basis for construction of housing complex
and residential houses/flats either independently or part of commercial complex.

ELIGIBLE BORROWERS

The borrowers may be a concern having constitution as proprietor, a partnership firm, a


company, a registered public trust or a Registered Co-operative society constituted to run
the venture on commercial lines as builders.

ELIGIBLE ACTIVITIES

Construction of houses, flats, apartments and housing complexes providing basic


infrastructure facilities like electricity, water, sanitation, telephones, lift, air
conditionersand cooling, parking, storage etc.
The financial assistance would be provided for construction activities for the sale on
commercial basis
.
PURPOSE OF LOAN

The assistance may be granted to eligible borrowers for:


(a) Cost of land.
(b) For construction of building for housing complexes/apartments(commercial cum
residential complex).

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(c) For acquisition of required plant and machinery/equipment, like lifts, air conditioning
plant and fire fighting equipments, other safety devices and also other plants and
equipments required for modern type of housing complexes.
(d) Furnishing of houses/flats.
XVIII. SCHEME FOR WORKING CAPITAL TERM LOAN WITH THE
FACILITY OF DEPOSIT AND WITHDRAWAL THROUGH PASS BOOK

Introduction:
The Corporation is operating schemes to provide working capital to good borrowers and
to new entrepreneur under the single window scheme. As per norms of the scheme,
WCTL is provided as term loan and borrowers are not free to withdraw and redeposit the
loan during the currency of loan. Considering this problem of entrepreneurs in view, the
Corporation has devised this new scheme.
Scope:
The following units will be covered for financing under this scheme:
i. Good borrowers eligible under the existing WCTL scheme.
ii. Units eligible under non-assisted unit (NAU) scheme for WCTL.
iii. New units or existing units eligible for WCTL under single window scheme to Tiny
and SSI units.

Eligibility Criteria:

The eligibility criteria will be the same as applicable under respective schemes already in
operation.

Quantum of assistance:

42
A) WCTL under GB & NAU scheme: Rs.2 lacs to Rs.100 lacs

B) Under Single Window scheme:

Upto Rs.200 lacs subject to the condition that component of WCTL shall not exceed
quantum of term loan proposed for the fixed assets ie. WCTL would not exceed to 50%
of the total term loan.

Liquidated Damages:

a) On principal overdue : If there are principal overdues as on


31st March of every year,the liquidated
damages as prescribed in respective
scheme shall be charged on the amount
of default and for the period of default
to be worked out as per repayment
schedule.
b) Interest over dues: Liquidated damages as prescribed in
the respective scheme shall be charged
on the amount due for the period of
default.

Service charges:

Service charges @ 1% pa. Shall be charged over and above interest to be due on
quarterly basis along with the interest on interest due dates.

43
Timely Payment Rebate:

No separate rebate would be available for the timely payment.

Pre-payment charges:

Pre-payment of loan is allowed without premium.

Repayment period:

a) The repayment be worked out as per the existing prescribed norms in respective
scheme.

b) Principal:
i. The loan shall be repayable in 4 equal annual instalments.
ii. The first installment shall fall due on 1st day of month falling immediately after
expiry of 12 months from the date of expiry of 3 months from the date of 1st
disbursement. In case of non payment dues in time liquidated damages shall be
charged as per norms.
iii. The interest shall continue to fall due on 1st day of each quarter.

b) The repayment schedule shall be automatically extended by the instalment


replenished. The concern has to ensure that the amount fallen due against principal in
a particular financial year shall be cleared in that particular financial year itself ie by
31st March, failing which liquidated damages shall be applicable as above.
c) The interest is payable on due dates failing which liquidated damages shall be
applicable as above.

Other Salient features:

44
a) Drawing and depositing facility: Every borrower may be allowed to withdraw and
deposit the amount of WCTL as many times as per the requirement subject to the
condition that in any case as on date of withdrawal the outstanding balance including
withdrawal in the account shall not exceed principal not due as per repayment
schedule.
b) Replenishment of limit: The borrower who is maintaining this account regularly
will have the facility of replenishment two times before original LDR after deposit of
four installments. The replenished amount will be added to the principal not due
amount as and when it is disbursed. As such no separate account is required to be
opened for the replenishment. The LDR shall also be extended by the number of
installments replenished. The replenishment shall be considered at the documented
rate of interest irrespective of whatever be the prevailing rate of interest.
c) Additional requirements of working capital can be considered separately for which
separate account shall be opened and shall be subject to interest rate prevailing at the
time of first date of disbursement.
d) No application fee and processing charges shall be charged for replenishment of
WCTL.
e) Transaction fee: Charges are to be levied on the basis of number of transaction of
deposit and withdrawal @ Rs.25/- each (excluding entries related to repayment
schedule) on the 1st day of the next quarter.
f) Maintenance of pass-book: Every borrower will be provided a pass book
containing details of amount sanctioned, disbursed , interest rate, liquidated
damages, service charges, repayment schedule and the amount replenished etc. This
passbook will have basic information of borrower and at the time of every
withdrawal and deposit the borrower will ensure that the entries have been made in
the passbook by the concerned Branch Office.

b) XIX.SCHEME FOR FINANCING AGAINST ASSETS

Introduction:
In this scheme the Corporation shall provide financial assistance to prospective
borrower for meeting their industrial financial requirements provided the prime

45
security is mortgaged to the Corporation under first charge free from all
encumbrances. The salient features of the scheme are as under:

I. Eligibility Criteria:

The following marketable and mortgageable fixed assets are eligible for availing
financial assistance under this scheme:
(a) Existing industrial units situated in industrial area saturated and having potential
ready to mortgage their prime security with the Corporation under first charge.
(b) Existing commercial complexes, hotels, nursing homes and other service sector
situated in Municipal limit of district headquarters ready to mortgage their mortgageable
security with the Corporation.
(c) Any other borrowers ready to mortgage their marketable immovable property
situated in Municipal limit of district headquarters.
(d) CMD is authorised to consider term loan against the immovable property i.e. land
and building only (marketable & mortgageable) situated at Municipal limits of the
district head quarters of the State other than Rajasthan in deserving cases with the
proviso that the fixed assets of unit located in Rajasthan in which such assistance will be
utilised shall also be mortgaged/ pledged with the Corporation.
(e) Switch over cases financed by banks/ FIs shall also be considered for financial
assistance under the Scheme after repayment of outstanding loan of banks/ FIs
simultaneously on transfer of title documents to the Corporation.

(f) Further term loan assistance to existing assisted running units of the corporation
having balance outstanding term loan amount may be considered on the difference of the
amount admissible under the scheme and the term loan outstanding in existing assisted
running units.

II. Coverage:

46
Property situated in Municipal limit of each district headquarter.Immovable property
(Land and Building) situated in fast moving industrial areas shall also be considered
eligible for mortgage finance.

III. Security:

(a) The security i.e. Land and building shall be under first charge of the Corporation by
way of equitable mortgage.
(b) Personal guarantee of proprietor/partners/directors for securing repayment of loan and
interest thereon.

IV. Security Debt Ratio:

The minimum security debt ratio of 2:1 shall be maintained.

V. Amount of Assistance:

Rs. 5.00 lac to Rs. 1000.00 lacs only.


In case of residential property loan below Rs. 25.00 lacs shall not be considered.

VI. Repayment Period:

The total loan shall be repayable in 3 ½ years including 6 months moratorium period.

VII. Rate of Interest:

The Corporation shall charge prevailing rate of interest as on date of Ist disbursement of
loan under the scheme.

47
VIII.Financial assistance is also available against immovable properties which is
rented/leased out to Corporate bodies/Banks/Financial Institutions/Insurance Companies

SCHEMES FOR GOOD BORROWERS

1. The Corporation has introduced new schemes for the benefit of our existing and
regular borrowers who have a proven track record of timely payment. These schemes
provide speedy sanction and liberal disbursement procedures.

2. FUNCTION

a) Providing financial assistance to existing good borrowers of the corporation under


different schemes. These schemes provide financial assistance to entrepreneurs to meet
out their working capital requirement and also for funding their expansion modernisation
and diversification projects.

b) Documentation and disbursement of loans sanctioned under GB Schemes is done at


HO except in cases having request of the promoter, for documentation and disbursement
is allowed in branches.

3.SCHEMES FOR GOOD BORROWERS

i)Short term loan to good borrowers(STL).


ii)Working capital term loan to good borrowers(WCTL).
iii)Special purposes working capital term loan(SPWCTL):
a) For acquiring set of diamond blade and/or segments by marble gangsaw units.
b) For acquiring set of back up roll/work roll, bearings, for replacement of machinery/
machinery parts and consumables specific to the need of the unit by SS Manufacturing
units.
c) For replacement of card cloth by carpet woollen yarn manufacturing units.
d) For textile units for replacement of parts of Stenter Machine, printing machine and

48
thermax boiler.
iv) Financial assistance to existing non assisted units with proven track record and new
units promoted by the good borrowers of the Corporation(UPGB).
v) Working capital term loan to non assisted units (WCTL to NAU).
vi) Gold Card Scheme (GCL).
vii) Platinum Card Scheme (PCL).

4. ELIGIBILITY CRITERIA FOR GOOD BORROWERS

Existing Units assisted by corporation fulfilling the following norms would be eligible: -

(i) The unit should be an existing one and assisted by the corporation irrespective of
whether the account of the unit is in operation or the account is squared up in past.
(ii) The unit should be in production during the last 3 preceeding years(two years in
respect of Special purposes WCTL Schemes) on date to date basis and working results
of atleast 2 years (one year in respect of Special purposes WCTL Schemes) out of 3(2)
years, should reveal positive cash generations including the positive cash generations in
immediate preceding year.

iii) The unit should have repaid atleast 30% of loan disbursed.(For STL, and WCTL
Schemes only)

iv) The unit's account is classified as standard assets during last 3 (two years in respect
of Special purposes WCTL Scheme) full preceding years.

v) The unit has not availed of any concession/relief by way of reschedulement, except
refixation based on actual loan disbursed, during last 3 years. However, if borrower’s
request for reschedulement is considered before committing default in three preceding
years (provided it fulfills all other eligibility criteria of the respective G.B. scheme), the
case may be covered under G.B. scheme.

vi) If any unit/entrepreneur or its sister or family/associate concern have availed benefit

49
of rebate/relief by way of waivement of penal interest/interest in the last 3 financial
years, the same is required to be refunded/deposited back while considering financial
assistance to such units/entrepreneurs under Good Borrower Scheme.

vii) There should be no overdues in the loan account of sister/associate concern, if any,
financed by the Corporation.

viii) COMMERCIAL COMPLEX CASES

(a) The unit should be operating/dealing with the Corporation for at least 2 years and
repaid 50% of loan disbursed.

(b) The account of the unit should have been classified as standard assets in last
2financial years.

(c) Working results and financial performance of the unit should be satisfactory in the
last 2 financial years and should have shown positive cash generation.

(d) The other norms of the GB schemes shall remain unchanged. However, if there is
short fall in prescribed norms of the security debt ratio, the Corporation may accept
immovable property which is marketable and mortgagable for the amount of gap.

5. ELIGIBILITY CRITERIA FOR GOLD CARD

i) The unit should have operating/dealing with the corporation for at least 4 years.

ii) The existing debt equity ratio should not be more then 1.5:1 as per balance sheet of

50
the last financial year.

iii) The account of the unit should have been classified as standard assets in the last 3
financial years.

iv) Working results and financial performance of the unit should be satisfactory in the
last 3 financial years.

v) The borrower should not have availed any benefit by way of waiver of interest/penal
interest or grant of reschedulement in the last 3 financial years and during current
financial year.

vi) There should be no overdue in sister/associate/family concern of the unit and also no
benefit of waiver of penal interest should have been granted during last three years.

vii) The working result of the concerns should justify repayment of existing and
proposed loan.

viii) The loan cases which have been paid off in past as per the LDR(excluding
prepayment) will be eligible for gold card loan provided their account were classified as
standard assets in the last three years from the date of clearance of account and they have
not availed term loan from bank. In case they have availed term loan from bank
(excluding working capital loan) and want to avail gold card loan from the corporation
then at first instance they shall have to avail the loan from corporation under any other
scheme and operate the loan account at least for one year with satisfactory dealings.
ix) COMMERCIAL COMPLEX CASES

(a) The unit should be operating/dealing with the Corporation for at least 2
years and repaid 50% of loan disbursed.
(b) The account of the unit should have been classified as standard assets in
last 2 financial years.
(c) Working results and financial performance of the unit should be
satisfactory in the last 2 financial years and should have shown positive

51
cash generation.
(d) The other norms of the gold card schemes shall remain unchanged.
However, if there is short fall in prescribed norms of the security debt ratio,
the Corporation may accept immovable property which is marketable and
mortgagable for the amount of gap.

Note:- Under this scheme, minimum security debt ratio of 1.75:1 shall be
kept.

BRIEF OF THE SCHEMES

a) Working capital term loan

This Scheme has been introduced for financing gap in working capital
requirement and working capital available from Bank. The loan admissible under
the scheme is Rs. 2.00 lac to Rs. 300.00 lac to the existing units assisted by the
Corporation. The assistance is granted on the basis of the gap in working capital
assessed by the Corporation based on requirements and working capital facilities
made available by the banks. The assistance is granted on the basis of security of
immovable property (only land and building excluding plant & machinery)
which should be 150% of the total assistance(including outstanding in existing
term loan account) being considered under the scheme.

b) Short term loan

The above scheme has been introduced to provide short term financial assistance
to our regular borrowers for meeting their needs for acquiring P&M, balancing
equipments or for expansion, modernisation, replacement of fixed assets or for
acquisition of any other assets. The assistance under the scheme is considered

52
from Rs. 2.00 lac to Rs. 500.00 lac. However, the total amount of assistance is
restricted to 4 times of the amount of principal repaid in term loan availed from
the Corporation.

c) Assistance to Non-assisted Units(UPGB Scheme)

The Corporation has introduced this scheme to provide financial assistance to


well established units assisted by banks or other financial institutions. This
Scheme also covers new units that are being set up or promoted by our existing
good borrowers.The financial assistance is available for the purpose of meeting
their needs for expansion, modernisation, diversification, purchasing of balancing
equipments etc.

Under this scheme assistance is being granted by the Corporation to the


following:-

i)New units promoted by our existing good borrowers.

ii)Units with proven track record not assisted by the Corporation but have availed
financial assistance from Bank or other financial institutions.

Under the scheme term loan assistance ranging from minimum of Rs. 20.00 lac
to Rs. 2000.00 lac as per the maximum permissible limit of RFC is being
considered subject to maximum of four times of the principal repaid.
d) Special purposes WCTL Schemes

Under this scheme financial assistance is provided:-


(i) To replace the existing blades/segments by marble gangsaw units.
(ii) For acquiring set of back up roll/work roll, bearings, for replacement of
machinery/ machinery parts and consumables specific to the need of the unit by
SS Manufacturing units.
(iii) To replace card clothing by carpet yarn manufacturing units.

53
(iv) For textile units for replacement of parts of Stenter Machine, printing
machine and thermax boiler.

The maximum loan admissible is equal to amount of loan repaid against principal
by a unit in the existing term loan account.

Subsequent Loans : Fresh Loan for the above purpose is also admissible even
when earlier loan has not been repaid in total.
Further admissible loan (on the same margin of security) and outstanding amount
in the existing SPWCTL account should not exceed the original sanctioned
amount under this scheme provided the unit is running.

e) Gold Card Scheme

Under this scheme, Corporation is providing speedy sanction and disbursement


of loan for meeting out immediate financial requirement of working capital
and/or for acquisition of fixed assets at free disposal in the hands of borrower.
The maximum loan admissible is equal to loan repaid with minimum security
debt ratio of 1.75:1. Rebate in interest is available @ 0.5% on the prevailing rate
of interest.
The maximum loan admissible under Gold card loan scheme on the basis of
security debt ratio is as under:

Loan admissible

Security Debt
Ratio
1.75:1 Equal to 5 times of cash generation
2:1 Equal to 6 times of cash generation
2.5:1 Equal to 8 times of cash generation
3:1 Equal to 10 times of cash generation

54
• Replenishment of loan amount is also eligible under the scheme, if
borrower has repaid at least 40% of loan amount and fulfilling other
requirements of the scheme with encouraging working results.
• The borrower may give his option to avail Floating limit upto 35% of loan
admissible at the time of applying loan under the scheme.

f) Working capital term loan to non assisted units

This Scheme provides to finance gap in working capital requirement and working capital
available from bank subject to maximum of Rs. 100.00 lac on security debt ratio of 2:1.
To become eligible under this scheme, a unit should have been in production during last
3 years and should reveal positive cash generation in 2 years out of last 3 years including
cash generation in immediate preceding year and ready to provide prime security under
Ist charge in favour of the Corporation.

Under this scheme, prevailing rate of interest shall be charged and rebate @ 0.25% for
timely payment is available. Further the security debt ratio shall be kept at 2:1 excluding
the value of plant and machinery.

g) PLATINUM CARD LOAN SCHEME

Introduction:
RFC is providing financial assistance to the SSI and medium scale units since last four
decades. During the course of financing, a number of entrepreneurs have established
themselves as good borrowers (GB) of the Corporation and the Corporation has already
taken steps to provide financial assistance to them on liberal terms through its various
exclusive schemes.
In order to encourage the existing entrepreneurs/good borrowers to have continued
business relationship with the Corporation in a competitive business scenario, the
Corporation has now introduced a new scheme termed as "Platinum Card Loan Scheme"
so that the existing entrepreneurs availing loan facilities under GB schemes with
satisfactory repayment behaviour may be further elevated/upgraded under this new

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scheme.

Purpose:
Providing of financial assistance to the existing good borrowers of the Corporation
availing loan facilities under GB Schemes, with satisfactory repayment behaviour, to
meet out their immediate requirement, either for working capital limit or to acquire fixed
assets or both.

Eligible Units:

- Existing gold card holders with proven track record of repayment of two years under
Gold Card Scheme.
OR
- Existing gold card holders with proven track record of repayment of one year under
Gold Card Scheme and two years in other Good Borrowers Schemes.
Note: This facility would not be available in joint finance cases.
Eligibility criteria:
- The existing debt equity ratio of the unit is not more than 1.5:1 as per balance sheet
of the last financial year.
OR
- On considering the proposed platinum card limit, the debt equity ratio would not
exceed 2:1.
- - Working results and financial performance of the unit should have been satisfactory
in the last 4 financial year and it should have revealed positive cash generation at
least for 2 years in the last 3 years.

- There should be no overdue in sister/associate/ family concern of the unit and also
no benefit of waiver of penal interest should have been granted during last three
years.

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- The working result of the concerns should justify repayment of existing and
proposed loan.
- Eligible amount:
- The eligibility of loan shall be assessed by the Corporation, which shall not be more
than 1.25 times of the loan repaid against principal in term loan, including UPGB
and short term loan under GB scheme (loan repaid in WCTL/Silver Card/Gold Card
loan account shall also be considered).
- The eligible amount under Platinum Card Scheme would be considered in two
segments ie. Fixed limit and floating limit.
- The floating limit would be equal to 10% to 35% of total platinum card loan
admissible, subject to maximum of Rs.10.00 lac.
- Platinum card would be considered only in the cases where admissible loan
under this scheme is Rs.10 lac or above.
- The maximum loan admissible under Platinum card loan scheme on the basis of
security debt ratio is as under:

Loan admissible
Security Debt
Ratio
1.75:1 Equal to 5 times of cash generation
2:1 Equal to 6 times of cash generation
2.5:1 Equal to 8 times of cash generation
3:1 Equal to 10 times of cash generation

Securities and security debt ratio:

The security debt ratio should not be less than 1.75:1. For the purpose of calculation of
security, MRV of land and building and book value of plant and machinery and MFA
(subject to maximum of MRV of land and building) shall be considered.
Note: If any gold card holder becomes eligible for platinum card, while considering the
eligible amount under Platinum Card Scheme, the outstanding in existing gold card

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account will be simultaneously squared up and shall be upgraded to the Platinum Card
Scheme by way of roll over. In other words, the entrepreneur cannot have gold card as
well as platinum card simultaneously. However, no prepayment charges would be
charged for such upgradation of gold card loan amount. The borrower shall, however,
have to surrender his gold card to get Platinum Card.
Processing of loan application:

No detailed appraisal would be carried out. Only entrepreneurs shall be identified by


analysing past track records with regards to repayment behaviour with the Corporation
and financial performance for the last four financial years.

Application and application fee:

After prima facie clearance of the case of the unit, the entrepreneurs shall submit formal
application in the prescribed format alongwith the application fee as per the existing
norms.

Margin and promoter's contribution:

No additional margin and promoter's contribution will be required to be brought in,


provided that the existing debt equity ratio is not more than 1.5:1. However, if after
proposed availment of platinum card limit, the debt equity ratio increases beyond 2:1,
the concern/unit has to bring additional capital or unsecured (Interest Free) loan so as to
keep the debt equity ratio below 2:1.

Interest rate:

The unit would have the option to choose fixed or flexi rate of interest at the time of
filing the application. Request for change in option in interest from fixed to flexi and
vice versa can be considered by the GM(Loans) before execution of loan documents.
After execution of loan documents, no such request shall be entertained.

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- Fixed rate of interest: Prevailing applicable rate of interest under the Platinum
Card Scheme, interest being payable quarterly, with 0.75% rebate for timely payment.
OR

- Flexi rate of interest : The rate of interest applicable under the Platinum Card
Scheme prevailing from time to time with admissible rebate for timely payment.
Note:
- In case borrower opts for flexi rate of interest, no premium on prepayment would
be charged.

Liquidated damages:

No default in intrest and principal shall be allowed. In case of default following action
shall be initiated :

a)Action u/s 138(b) of NI Act .


b) The status of card holder may be switched over to general loan scheme if the default
is not regularized with in 15 days of default .
c) The card, if any, issued to such borrower may stand cancelled .
d)The corporation shall charge liquidated damages @ 2% p.a on the amount in default
for the period of default from day one.

Repayment period:

A)Fixed limit :

i)The loan shall be repayable in maximum 5 years in quarterly installments including a


moratorium period not exceeding six months through 18 PDCs. The first installment
shall fall due on first day of month falling immediately after expiry of six months from
the date of first disbursement .

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ii) The unit may pre-pay without attracting pre payment premium.
iii) The concern shall make the payment of interest on first day of each quarter i.e
March,June ,September and December.

Moratorium period:

The moratorium period for payment of principal sum would not exceed six months.
However, interest shall be paid quarterly.

Disbursement:
The disbursement will be released in maximum two instalments.

Validity of sanction:

The sanction will be valid for 6 months only from the date of communication of
sanction. Extension in sanction beyond 6 months to 12 months shall be considered by the
sanctioning authority.

• Replenishment of loan amount is also eligible under the scheme, if


borrower has repaid at least 40% of loan amount and fulfilling other
requirements of the scheme with encouraging working results.
• The borrower may give his option to avail Floating limit upto 20% of loan
admissible at the time of applying loan under the scheme.

7. MISCELLANEOUS

a) Interest rate:

Prevailing rate of interest is chargeable in all the Schemes of good borrowers, UPGB
Scheme and WCTL to non assisted units and Special purposes WCTL Scheme.

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b) Processing Charges:

Processing charges @ 0.75% p.a. is chargeable under STL, UPGB, WCTL, SPWCTL,
WCTL to non assisted units for good borrowers.

c) Rebate

Rebate for timely payment is available as under:-

(i) Good borrower scheme – (STL-1.25%, UPGB-1.25%, WCTL-1.25%,


SPWCTL1.25%, WCTL to NAU-0.25%)
(ii)Gold Card Scheme – 0.5%
(iii) Platinum Card Scheme – 0.75%

d) Repayment:

Under all the Schemes repayment is taken through PDCs

8. DELEGATION OF POWERS

Exclusively powers for sanction of loan are available to field offices under GB Schemes
to the extent power available in general term loan scheme. However power for sanction
of loan under Gold card and Platinum Card schemes are available at HO only
irrespective of amount

i. Short term loan(STL) - Annexure-A


ii. Working Capital term loan(WCTL) - Annexure-B
(Under GB ).

9. Application form under different schemes of Good borrowers:-

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Scheme and WCTL to non assisted
units)

iii. Unit promoted by Good borrower(UPGB) – Application form above Rs. 2.00 lac
applicable under general term loan Scheme may be used.

Note: These forms are available on Website and can be electronically transmitted.
Application form can be submitted to the office along with cost of form besides
application fee prescribed.

Application forms for Special purposes WCTL Scheme and Gold Card and Platinum
Card schemes can be obtained from our branch office.

Please ensure filling of correct application form relating to concerned scheme.

DISBURSEMENTS

When disbursement starts


Where disbursement is made

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Procedure for disbursement of loan
Procedure for quick disbursement

When disbursement starts

Disbursement of sanctioned loan will start only after execution of loan documents.

Where disbursement is made

Disbursement in all loan cases irrespective of loan amount except joint finance case is
made from branch offices. In joint finance cases, the disbursement is made at HO.

Procedure for disbursement of loan

Disbursement of loan is made after ensuring capital contribution and unsecured loans
have been raised in full by the promoter which is corroborated from C.A. certificate.

(i) Disbursement against Land: -

Disbursement of loan against land is made on the basis of payment receipts submitted by
the loanee unit for purchase of land/conversion charges paid to State Govt. /RIICO

(ii) Disbursement against Building: -

Disbursement of loan against construction of building is made on the basis of valuation of


building and construction material lying at factory site.

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(iii) Disbursement against Plant & Machinery: -

Disbursement of loan against Plant & machinery and MFA is made on the basis of
valuation of assets created at factory site and after submission of bills, payment receipts
etc.

The bills and payment receipts for petty items valued up to Rs. 250/- for each item
subject to maximum of 5% of the cost of Plant & machinery is not insisted upon .

Individual bills and payment receipts for expenditure incurred on erection and installation
of plant & machinery, electrification and misc. items like tools, jigs etc. are not required
but a statement of expenditure showing item wise details in this regard duly certified by a
C.A. to the extent of provision made in approved scheme are required to be submitted by
the loanee.

Cash payment exceeding Rs. 10,000/- against single bill/ invoice except statutory
payment to RIICO, RFC, RSEB, Commercial Banks etc. is disallowed for the purpose of
disbursement of loan.

In case of company, disbursement of loan exceeding 50% or second disbursement is


made only after the company submits copy of returns under section 125 of the Companies
Act alongwith copy of receipts of filing fee deposited with Registrar of Companies
concerned to the Corporation
.
In case of imported Plant & machinery, the Corporation may provide Letter of Comfort
to designated bank for opening letter of credit on the request of the loanee unit.

The Corporation may provide letter of assurance to the supplier of Plant & machinery on

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the request of party for making earmarked amount of payment against machines to be
supplied by the supplier.

In case of change in supplier of Plant & machinery, Corporation may consider approval
of change in supplier/ specifications of plant & machinery if changes are made for
genuine reasons.

Corporation may also consider necessary excess saving adjustment against building, plant
& machinery, MFA.

Disbursement of loan is also made for retiring bank documents against despatch of Plant
& machinery from the approved manufacturer/ supplier on production of bank intimation,
copy of invoices, transport receipts, transit insurance and after verification of goods at
transporter’s site.

Procedure for quick disbursement

(i) Disbursement in all company cases or the cases other than company where party has
offered minimum 50% collateral security of the sanctioned loan, Corporation may release
three advance installments of disbursement but each such installment would not be more
than 25% of sanctioned loan amount. First installment is released on the basis of CA
Certificate provided the unit has raised its entire paid-up share capital and unsecured loan
envisaged in the approved scheme, complied the requisite terms and conditions of
sanction letter and submitted an undertaking that investment on land, building, plant &
machinery has been made in accordance with the title of land, approved building plan,
approved supplier of plant & machinery. The subsequent advance installment is made
only after watching proper utilization of earlier advanced installment of loan.
(ii) Disbursement of loan may be made on the basis of Performa invoice in respect of
plant & machinery supplied by the reputed supplier specifically approved by the
Corporation.
(iii) Disbursement of loan in case of existing marble units going for expansion of project,

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disbursement to the maximum extent of 50% of sanctioned loan against plant &
machinery may be made in advance after compliance of certain formalities /norms.
(iv) In case of tourism related projects, disbursement of loan is made in 4 equal
installments. Advance disbursement may be considered provided disbursed amount is
adequately secured by existing assets. Subsequent advance disbursements are made only
after watching utilization of earlier advanced installment of loan made to the unit.

Case study

Case study

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M/s sand dune buildcon pvt. Ltd., jaipur uder scheme for construction of commercial
complex at plot no.1 F-Block, amrapali circle, vaishali nagar, jaipur

Proposal for sanction of further term loan of Rs. 500.00 lacks

Under mentioned is a concise presentation of the preparation of the project different


information and clarification sought for conclusion and recommendations of the appraisal
team based upon the same.

Section 1

Broad outline of the project

1. project construction of commercial complex


2. important parameters :
 Cost of the project : 3675.00
 Promoter’s contribution : 40%
 Capital cost/person : Rs. 4.61 lacks
 Debt equity ratio : 2:1
 Security margin : 30%
 Dscr : 1.70
 Repayment period : 3 years
Including moratorium period : 3 month
3. pariculors of the company project
4. brief particulors of the project
5. expected date of commercial production
6. cost of the project

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Particulars (Rs. In lacks)

Land 1748.49
Building 1232.00
Misc.fixed expenses 352.00
Prel. & pre on exp. 341.00
Working cap margin 1.51
___________
3675.00
___________

7. Source of finance

Share capital 347.93


RFC loan 500.00
Unsecured loan 1075.00
Share premium 232.0
Term loan 1000.00
Booking advance from customer 520.00
_____________

Total 3675.00

8. GOVT. APPROVAL- date of incorporation 27/12/2008

Approval of building map 09/03/2007


9. APPRAISAL TEAM- Mahavir jain Dy.Manager(L)

Anil goyal Dy.Manager(T)

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SECTION ІІ:

History and background of the company and its directors


• Introduction
• The Promoters
• Management Of The Company
• Working Of The Sister concern/Company
• Credit Investigation
• Implementation Schedule
• Progress Made So Far

SECTION III
Scope and Marketing

SECTION IV

1. Technical Aspects Of The Project


2. Location
3. Building, Plant & Machinery
4. Manufacturing Process
5. Technical Know How
6. Infrastructural Facilities

SECTION V
Cost of Production, Profitability, and Cash Flow

SECTION VI
Economic Appraisal

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CONCLUSION 0F THE CASE STUDY

It is recommended that further term loan of rs. 500.00 lacks(rupess five hundred lacks
only) in favor of M/s sand dune buildcon Pvt.Ltd., jaipur may be sanctioned under the
scheme for construction of commercial complex on the term and conditions as mentioned
here under.

Terms and conditions for the term loan

Before conveying sanction of loan

1. Processing charges:
The processing charges @ 1% of Rs. 500 lack i.e. Rs. 500000 service tax @ 12%
Rs. 60000/- and education cess @ 2% Rs. 1200/- total Rs. 561200/-

Pre-documentation conditions

2. Purpose:
Particular Amount
For construction of building Rs. 389.00 lack
For acquisition of p&m/mfa Rs. 111.00 lack

3. Initial margin
30% on building and 30% on p&m/mfa

4. Effective margin
68.43% on building and plant& machinery/mfa

5. Repayment period:
The proposed loan shall be repayable in 3 years and 3 months in quarterly
installments including moratorium period not exceeding 3 month. The first
installment shall fall due on 1st march 2008.

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6. Rate of interest:
The rate of interest on proposed term loan shall be the prevailing rate of interest
of the corporation on the day of first disbursement of loan. Presently the rate of
interest is 12.75% p.a. the interest shall be completed compounded quarterly.

7. The rebate for timely payment @ 1.25% p.a. as per P.G. circular no 1167 dated
6.1.2007 shall be made available after availment of 75% of the sanctioned loan of
Rs. 500 lack with retrospective effect as otherwise the timely payment rebate @
1.00% shall be admissible.

8. The company shall not pay any dividend on it shares in case there are over dues
of the corporation.

9. Undertaking & declaration:

o The company shall complete all legal requirements and pay the yearly and
other dues to run the unit i.e. obtaining NOC/ license from local authority,
RPCB, & other departments, if so required.

o That the construction of the building shall be made as pr approved


building plan / site plan and FAR allowed by competent authority in case
of any deviation, the construction shall be approved from the competent
authority.

o That the company shall deposit with the corporation 60% of sale proceeds
of the commercial complex up to the clearance of total term loan.

o That the company shall fulfill terms and conditions of the allotment letter/
lease deed issued by the JDA.

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10. The company has to retain the area measuring 30790 sq.ft. of 5th 6th and part of 7th
floors.

11. The company shall display a board at site mentioning that the project has been
financed by RFC and the purchaser shall have to obtain no dues certificate from
RFC before purchasing the area by them.

12. All the directors of the company shall provide their personal guarantee for
repayment of loan and interest theron with other charges.

13. In case of switchover/ prepayment of loan account from the corporation no


recovery of timely payment rebate credited in the loan account shall be made, but
prepayment premium applicable as per norms shall be charge up to 50%

14. The company shall raise its authorized share capital up to the extent of Rs. 350
lacks including existing authorized share capital of Rs. 180 lacks sand company
shall amend its MOA accordingly.

15 the directors shall submit photo copy of immovable properties as shown in their
net worth statement

16. The company shall get the approval of building plan from JDA in the name of
company.

Disbursement condition

The company shall increase its authorized share capital to Rs. 350 lacks the
company shall also raise its issued, subscribed and paid-up share capital up to the

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extent Rs. 347.89 lacks the company shall also raise share premium to the extent
of RS. 232.07 lacks.

the booking advance amount of RS. 520 lack shll be raised before seeking
disbursement against building and p&m/mfa. Any shortfall in booking advance
shall be brought in by the company from its own sources.

disbursement against building p&m/mfa shall be made after valuation and


ensuring that the construction of building is made as per approved building plan
and approved scheme.

CONCLUSION AND RECOMMANDATION

As Rajasthan financial corporation is working for socio economic welfare state Govt. is
the major share holder in RFC state Govt. should provide free for financial restructuring.

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Corporation must strive to get International sources of financing with the help of
national level of institutions like IDBI and SIDBI.
The corporation should insist on higher promoter’s commitment I the project and
ensuring adequate security cover.
The corporation margin is under pressure due to higher cost of funds, which is required
to be reduced.
Financial analysis is primarily based on the future cash flow projections however these
estimates can not be predicted with a degree of reliability. Therefore proper
consideration should be given to the sensitivity analysis to judge the impact of key
variable on the financial performance.
Cash flow should be adequately discounted and the present value of the cash flows
should be calculated by the application of appropriate discount rate.
This help in judging the true worth and revenue generation capacity unit.
To ensure the timely repayment of dues sales forecasting is of absolute importance
relying on sales figures presented by the promoters advance static techniques should be
used or sales projection . Variance analysis should be conducted in case of a major
difference between the actual and budgeted figures of operations. Revised estimate and
cash flow be worked out.
Integrated database of the key factor that has been contributing to the project failures of
the regional basis should be maintained. Management information system should be
restructured. This is essential to help various deptt. Of work in close cooperation and
coordination with each other.
There is a need for greater computerization to increase the efficiency .The manager
should have online access to the critical info and also the delays caused by the manual
file movement system could be avoided through different concerned authorities.

BIBILIOGRAPHY

SFC ACT 1951


• Procedures and guidelines (rfc).

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• Broachers and printed material of the corporation.
• Rajasthan Financial Corporation Annual Report 2007-2008.

INTERNET
• www.rfc.online.org

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