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Debt Restructuring Mechanism : Small
and Medium Enterprises (SMEs)
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| 1. |
SME
Includes :- |
Tiny Industries, Small Scale Industries
(SSI), |
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Medium Industries (ME) and Small Service |
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& Business Enterprises. |
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| 2. |
Eligibility
Criterion :- |
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Following viable or potentially
viable SMEs are eligible |
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a)
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All non-corporate SMEs irrespective
of the level of dues |
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to bank. |
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b)
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All corporate SMEs, which are enjoying
credit facilities |
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from a single bank, irrespective of
the level of dues to |
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the bank. |
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c)
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All corporate SMEs, which have funded
and non-funded |
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outstanding up to Rs.10 Crores under
multiple / |
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consortium banking arrangement. |
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Accounts involving
fraud and malfeasance and / or classified, as |
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"Loss Assets"
will not be eligible for restructuring under these guidelines. |
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| 3. |
Viability
criteria :- |
The unit should become viable in 7
years and the |
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repayment period for restructured
debt shall not exceed |
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10 years. |
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| 4. |
Restructuring
Parameters :- |
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a.
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Minimum ROCE (Return on Capital Employed)
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equivalent to 5 years G. Sec. + 3%. |
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b.
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Minimum Average DSCR (Debt Service
Coverage |
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Ratio) should be more than 1.25 and
in every year |
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it should be more than 1. |
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c.
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Benchmark gap between IRR (Internal
Rate of Return) |
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and COF (Average Cost of Funds) should
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be at least 1%. |
| 5. |
Implementation Period :- |
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60 days from date of
receipt of request / reference. |
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| 6. |
Extent
of Relief / Concession / Sacrifice :- |
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Interest not below the ceilings mentioned as under. |
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| Working Capital |
Interest 1.5% below the contracted rate. |
| Funded Interest Term Loan |
Interest Free. |
| Working Capital Term Loan |
Interest 1.5% below the contracted rate. |
| Term Loan |
Concession in Interest not more
than 2% (not |
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more than 3% in case of tiny / decentralized
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sector units) below the contracted rate. |
| Additional Loan / Contingency
Loan Assistance |
Interest not below 1.5% from BPLR of Bank
i.e. |
| presently 14.00% w.e.f. 20.02.2007 |
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In no case sacrifice in principal and simple
interest shall be considered.
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Note:- Rate of interest is subjected to change on review
of company's performance and the prevailing interest rate
scenario after every 3 years from the date of sanction.
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Copyright
© 2000 The Bank Of Rajasthan Ltd.
All rights reserved.