Financial Services offered by HSIIDC

The scope of financial services provided by HSIIDC has been enlarged over the years keeping in view the ever-growing needs of industrial sector. The services now being provided include:

• General Term Loan
• Equipment Finance Scheme (EFS)
• Working Capital Term Loan (WCTL)
• Loan under TUF Scheme
• Line of credit Scheme (LOC)
• Scheme for Financing Industrial Infrastructure/Commercial Complexes
• Scheme for Corporate Loans
• Scheme for Take-Over of loans of other institutions/banks

Who is Eligible?

Only Corporate entities & partnership firms having manufacturing set up or intending to set up one in the State of Haryana are eligible for availing financial assistance from HSIIDC.

Policies and Procedures relating to General Term Loan

The policies and procedures relating to various services offered by the Finance Division of the Corporation are discussed hereinafter.

TERM LENDING

What can be financed ?

The unit should envisage setting up manufacturing facilities in the State of Haryana. The service sector entities like Hotels, Hospitals, Warehousing etc. are also considered eligible for financing.

Scheme for Financing commercial complex's

Sensing the needs of borrowers, HSIIDC has introduced a Scheme for construction of Commercial complexes. The assistance under the scheme is provided for:

1. Acquisition of land and construction of building thereon.
2. Interior decoration, air conditioning, communication facilities for commercial complexes and shopping malls.
3. Acquisition of racks for storage, weigh bridges, conveyor system, lift for show rooms, departmental stores, sales outlets etc. Products for sale will not be considered for financing.
4. In case of existing functional commercial complexes, renovation cost and cost of acquisition of additional establishment could also be considered for financial assistance.
5. Any other required facilities connected with the commercial complexes, can also be considered for financing.

The land should be in name of company or its promoter and same be mortgaged with the Corporation.

Financing Parameters

Scheme for take over of loans of other Institutioins/ banks

The Corporation has a scheme for take over of loans of other Institutions / Banks,  along sanctioning of loan for expansion/modernization schemes of such companies. This will facilitate dealings of the company with one institution, improve the asset quality of the Corporation, while reducing the cost of funds for the borrowers.

The scheme shall be subject to following parameters:-

• All the parameters of general loan scheme such as Debt Equity Ratio, loan limit shall be applicable for this scheme also. The assets coverage ratio for the loan being taken over should not be less than 1.5 times.

• The unit should be in existence and profits at least for the last one year.

• The unit should be regular with the institutions/banks from where it has  availed financial assistance and the account should have been classified as ‘standard assets’.

• The collateral security as may have been given to other institution/banks shall be obtained.

• The entire loan should be taken over and loan thus taken over shall be secured by way of first charge on fixed assets of the company .

• The payment should be directly released in favour of institution/banks which has extended the financial assistance.

However, this take-over of loans will not be in isolation and shall be resorted to only when company has scheme for additional loan for expansion/ modernisation.

Technology upgradation Fund Scheme for Textile Industry (TUFS)

The Ministry of textile, Govt. of India  announced Technology Up-gradation Fund Scheme for technology up-gradation & modernization in the Textile and Jute Industries which has now been extended to 31.03.2012. Under the scheme five percentage point on the interest rate actually charged by the identified financial institutions shall be reimbursed on the sanctioned projects (after 1.04.07).

Scheme for Financing Industrial Infrastructure in Industrial Estates developed by HSIIDC & HUDA

Purpose:

Assistance to be provided under the scheme for the following:

• Lifts, Interior decoration, air conditioning, Fire fighting equipments, communication facilities etc. required for the building.

• In case of existing buildings, renovation cost and cost of acquisition of additional establishment could also be considered.

• Any other required facilities connected with the infrastructure projects.

Eligibility:

• The land for such infrastructure project should be in name of company or its promoter and falling with in the HSIIDC/HUDA area and the same be mortgaged with the Corporation.

• The company/concern shall obtain NOC from estate Division of the concerned agency to the effect that the unit is otherwise eligible for leasing as per EMP-2005 and there is no default of the conditions of the allotment.

• The company will undertake that while leasing out any part of the building constructed/developed by the company, a tripartite agreement will be executed amongst the Corporation borrower and  lessee and will get the tripartite   agreement approved from the Corporation.

• The company shell open a seprate  Escrow account in which the rent on account of leasing out of any part of the building constructed/developed by the Corpn. shall be deposited directly by the lessee and where from the repayment of instalments due to the Corporation will automatically be credited to the Corpn. on due dates

Financing Parameters

Monitoring and Follow up:

Once financial assistance is extended to any client, sharing of information relating to the project is important. The Corporation has a system to follow-up the progress of the case at all stages. Following information, which may be useful to both lender and the borrower, is required to be submitted :

DURING IMPLEMENTATION OF THE PROJECT 

Quarterly progress reports of the project are required in the prescribed format.

After Implementation of the Project   the client is required to comply with the following:

• Annual renewal of Insurance cover of the assets;
• Submission of half yearly reports (quarterly reports in case of listed Companies) indicating actual performance vis-a-vis projections in prescribed format;
• Submission of audited annual accounts;
• Physical verification of the assets by the officer(s) of the Corporation at least twice in a year; 
• Balance confirmation as on 31st March of every year, till the assistance is fully repaid.
• Intimation of change in Directors/promoters, if any
• Annual statement of net worth of guarantors
• Conduct quarterly Board meetings in the presence of Nominee Director 

Recoveries:

The Corporation's capability to serve its clients in the best possible manner is dependent upon timely recoveries of its advances to the borrowers. The clients should be aware that their loan accounts are classified in three categories as per the guidelines issued by the RBI. These categories are:-

• Standard Assets
• Sub-standard Assets
• Doubtful Assets

The classification of loan account in any of the above categories and provisioning in lieu thereof is to be done by the Corporation in accordance with the guidelines issued by the RBI from time to time. However, the clients must understand that while the provisions are just nominal in case of standard assets, these keeps on going up with the loan accounts becoming sub-standard and doubtful assets in line with the aging of default as well as realisable security cover available to the Corporation towards repayment of interest and principal amounts. It is, therefore, crucial both for the Corporation as well as the client to ensure that his account does not become a non-performing asset (NPA) and remains in the Standard Asset category.

RECOVERY SCHEDULE

The repayment of principal and interest thereon is required to be made in quarterly installments falling due on 30^th April, 31^st July, 31^st Oct. and 31^st January in a financial year (these dates may be different in old cases). The rationale behind recovering the due amount on a quarterly basis lies in the Corporations liability to service the loans/ refinance it avails from banks/ refinancing institutions for its clients.

The repayment schedule of installments is worked out on the basis of tenure of the loan at the time of first disbursement. However, there are also cases where a client may not need to avail some portion of the sanctioned loan and he may be in a position to complete his project without really needing the balance unutilised assistance. In such cases, the client will be allowed the benefit of re-fixation of his installments only once in accordance with the amount of loan actually disbursed and the tenure of the loan subject to his furnishing an undertaking that the balance unutilised component of the loan be cancelled. However, in all such cases, the amount paid by them towards initial installments till the date he makes such request will not be recalculated for re-fixing the installment schedule. In other words, while revising the repayment installment amount, retrospective benefit will not be admissible.