GUIDELINES FOR ONE TIME SETTLEMENT SCHEME (OTS)-2007 1. COVERAGE (ELIGIBILITY CRITERIA) : (i) All the Doubtful /Loss category of assets as on 15.03.2007, as per the RBI guidelines on Asset classification, are eligible under this Scheme (ii) The Scheme will be in operation from 15.03.2007 to 30.09.2007.The last date for receipt of application under the scheme will be 30.09.2007. The loanee(s) eligible under this Scheme for Settlement, who fails to apply under the Scheme shall not be eligible for any other OTS scheme from the Corporation in future. (iii) The Scheme shall also cover the cases pending before the Courts/ DRTs/ BIFR, if those are otherwise eligible and covered under the clause mentioned at (i) above, subject to the condition that the loanee (s) shall furnish an undertaking to withdraw the case prior to submission of OTS application and submit the consent/ decree/ permission from the respective Courts or final withdrawal order of the case by him/her/them voluntarily prior to issue of No Dues Certificate (NDC) in the event of payment of Settlement amount and ineligible loans till the date of final payment to the satisfaction of OSFC. (iv) The Scheme shall also cover cases, where assets are lying unsold and the assets have been sold partly or fully after seizure U/s -29 of SFCs Act, 1951. (v) The unit(s)/loanee(s)/promoter(s) shall not be eligible for availing further financial assistance from the Corporation for a minimum period of three years from the date of issue NDC on settlement, once their accounts are settled under this OTS Scheme. (vi) Cases of willful default, fraud and malfeasance are normally not eligible. However, if OTS is found to be a better route for recovery, such cases may be processed. Managing Director shall be the Competent Authority to allow such cases for consideration under this OTS Scheme in spite of angle of willful default/ fraud/ malfeasance involved without prejudice to our claim or outcome of any criminal case(s) filed by the Corporation, subject to condition that the borrower(s) shall not be absolved from any action and/or his/her/their responsibility on account of willful default/fraud/malfeasance committed with any other financial institutions/agencies . (vi) The loanee(s) under category (i) above, whose cases have already been considered for settlement of their loan accounts under any of the OTS Schemes launched during 2005-06, whether paid in part or not including cases already cancelled, are allowed to apply under this OTS Scheme afresh on deposit of requisite Processing charges and minimum 10% of the Principal outstanding as Initial deposit irrespective of their payment (whether as initial deposit and/or towards part payment of Settlement amount under any of the earlier OTS Schemes launched during 2005-06) for settlement under this OTS Scheme. However, this option is not available for Cases where the settlement amount has been fully paid irrespective of payment of ineligible loan(s). For cases, which have already been considered for Settlement under any of the OTS Schemes launched during 2005-06 irrespective of being paid in part or not including cases already cancelled for non-payment of Settlement amount and interested for switch over option to this Scheme shall must apply afresh within maximum one month from launch of this Scheme or within 30 days from issue of the Settlement order under any of this Schemes launched during 2005-06 along with requisite documents, processing charge and initial deposit as applicable under this Scheme. (vii) Notwithstanding anything contained in the present Scheme, the Corporation reserves the right to accept or reject any settlement proposal at any stage without assigning any reason thereof. Similarly, deposit of application under this Scheme would not debar the Corporation from taking recourse to other measures to recover the outstanding dues from the applicant. (viii) Cases of (i) shall exclude the cases, where orders for winding up have been passed and official liquidator has already been appointed. In cases, where BIFR has recommended for winding up, such cases shall also not be covered under this Scheme. (ix) This Scheme shall not cover any agency loan(s) (NEF, Seed Capital loan, IDBI Seed capital, Soft loan of Government, Margin Money Assistance etc.) and Soft loan released out of Special Share Capital of the Corporation. Further, the Scheme shall not cover Cyclone loan disbursed for restoration of damage caused by the Super Cyclone of 1999, loans disbursed under RTDM Scheme, HP and STWC Loans. Dues under the above loans are normally payable over and above Settlement amount against eligible loans. However, special incentives in shape of part waiver of interest shall be allowed for prompt payment of Cyclone and RTDM loan dues, which is mentioned here below at para 10. Component of agency loan on account of NEF, for which the Corporation has not received refinance support on liberal terms from SIDBI, shall be considered as an eligible loan for settlement under this Scheme. Similarly, Cyclone and Flood Loan disbursed prior to Super Cyclone of October’99 and remaining unpaid as on the date of application shall also be eligible for settlement under this Scheme. (x) In case the Corporation has got a Decree from any of the Court with or without interest on the decreed amount, such cases may also be eligible for settlement under this Scheme and in that event the Settlement amount as arrived under this Scheme or the decreed amount along with interest if any, whichever is lower shall be the Settlement amount. (xi) Once the loan account is settled, the Corporation shall not be liable for payment of any institutional / statutory dues of any type against the unit. The promoter(s) alone shall be liable for such payment(s). (xii) In the event of failure by the promoter(s) concerned to avail th is last opportunity under this OTS Scheme, the guarantor(s), if he/she/they so desire, can apply for OTS of the loan account for which guarantee is provided by him/her/them subject to condition that the guarantor(s) shall be absolved from their respective liability in case he/she/they pay(s) the settlement amount as shall be arrived as per the applicable parameters under the Scheme to the satisfaction of OSFC. In such a situation, NDC shall not be issued, but guarantee / mortgage provided by the guarantor(s), if any, shall be released. 2. PROCESSING CHARGES TO BE PAID FOR OTS: The applicants shall deposit non refundable Processing Charge for processing the OTS application in the following manner. Sl. Category Amount of No. Processing charge 1 Cases having disbursement up to Rs.25,000.00 Nil 2 Cases having disbursement above Rs.25,000.00 Rs.1,000.00 and up to Rs.5,00,000.00 3 Cases having disbursement above Rs.2,000.00 Rs.5,00,000.00 and up to Rs.20,00,000.00 4 Cases having disbursement above Rs.3,000.00 Rs.20,00,000.00 and up to Rs.30,00,000.00 5 Cases having disbursement above Rs.5,000.00 Rs.30,00,000.00 and up to Rs.50,00,000.00 6 Cases having disbursement above Rs.10,000.00 Rs.50,00,000.00 3. PROCEDURE OF APPLICATION AND PROCESSING OF APPLICATIONS: (i) The eligible borrower(s) shall submit an application in the prescribed format (for which he/she/they will be given an acknowledgement by the Branch concerned) together with a declaration in the prescribed affidavit accepting the Settlement amount and agreeing to enter into an agreement with the Corporation for payment of the Settlement amount in lump sum or within the stipulated period as per this OTS Scheme with or without applicable interest, if any, as per this Scheme parameters, if OTS is approved and communicated. (ii) The application for OTS under this Scheme shall be accompanied with requisite non-refundable Processing Charge and Initial Deposit in shape of D.D/Pay Order/Bankers Cheque/Cash as applicable under the Scheme, affidavit in the prescribed format and voluntary undertaking for withdrawal of the case filed, if any, wherever applicable, so as to consider the OTS application as a valid one . (iii) The application shall also be accompanied with audited Balance Sheets, Profit & Loss accounts, Cash Flow Statements for 2003-04,2004-05, and 2005-06 along with other documents, if any, This will be applicable for cases having disbursement above Rs.10 lakhs excluding ineligible loans . (iv) The Branch Office after due scrutiny of the valid OTS proposals as prescribed under this Scheme shall place it to the Branch Level One Time Settlement Advisory Committee (BLOTSAC) at the Branch Office for cases having disbursement of eligible loans up to Rs.50.00 lakh and to One Time Settlement Advisory Committee (OTSAC) at Head Office for cases having disbursement of eligible loans above Rs.50.00 lakhs. However, cases of willful default/fraud/malfeasance having disbursement of eligible loans up to Rs.30.00 lakhs and above Rs.30.00 lakhs shall be placed before BLOTSAC and OTSAC respectively before being placed to the Managing Director for clearance to consider the case for OTS or otherwise along with the recommendation of BLOSTAC and OTSAC. The valid OTS applications, after due deliberation by the BLOTSAC/OTSAC, as may be, shall be placed to the Competent Authorities with the recommendation of BLOTSAC/OTSAC for approval of the OTS proposals. (v) Where the OTS application submitted is not complete, i.e., an invalid one, the same shall be rejected at the Branch level. (A) Constitution of OTSAC at H.O. i. HOD of Recovery Department - Chairman ii. HOD of Finance Department - Member iii. HOD of Legal Suit Department - Member iv. HOD of Business Develop Deptt. - Member v. HOD of Internal Audit Department - Member vi. HOD of Internal Vigilance Department - Member vii. DGM/B.M of the concerned Branch - Member & Convener (B) Constitution of BLOTSAC at B.O. (i) DGM/BM, OSFC - Chairman (ii) Senior most Officer from Finance wing - Member (iii) Technical Officer, if any - Member (iv) Legal Officer/Asst. if any - Member (c) i) In the absence of the designated Chairman for OTSAC/BLOTSAC, the next senior most officer present shall chair the meeting and the Managing Director is authorized to reconstitute the OTSAC/BLOTSAC, whenever necessary. ii) The DGM / BM of the concerned branch shall have the authority to co-opt any other officer(s) / Assistant(s) against the technical officer and/or the Legal officer/ Assistant, if not available in the branch. iii) While notify ing the committee at Branch i.e., BLOTSAC, the DGM/ BM of the concerned Branch shall notify one of its member as member convener. iv) No sub delegation / representative can replace a designated member. 4. DETAILS OF SETTLEMENT FORMULAE: The Settlement Amount that shall be recovered under different categories is indicated below: BAND SETTLEMENT FORMULA Total Amount disbursed minus Repayment since inception till date of application Disbursement or 50% of amount disbursed, whichever is lower up to Rs.25000/- Total Amount disbursed plus Interest @ 5% to 10% till cut off date (31.03.2003 Disbursement for cases under Sl. No. 1,2,3 & till date of application for Sl. No. 4) less above Repayment since inception till date of application or Principal outstanding Rs.0.25 lakh as on date of application, whichever is lower and up to Sl.No. Condition Rate Rs.5 lakhs 1 Loan period is more than 20 years till cut off @ 5% p.a. till date or one who has repaid more than 200% cut off date of amount disbursed 2 Loan period is more than 15 years & up to 20 @ 7% p.a. till years till cut off date or one who has repaid cut off date more than 150% & up to 200% of amount disbursed 3 Loan period is up to 15 years till cut off date @ 8% p.a. till but disbursed prior to 31.03.1998 cut off date 4 Loan is disbursed after 31.03.1998 @ 10% p.a. till date of application Total Amount disbursed plus Interest @ 7% to 12% till cut off date (31.03.2003 Disburement for cases under Sl. No. 1,2,3 & till date of application for Sl. No. 4) less above Rs.5 Repayment since inception till date of application or Principal outstanding lakh and up as on date of application, whichever is higher to Rs.20 Sl.No. Condition Rate lakhs 1 Loan period is more than 20 years till cut off @ 7% p.a. till date or one who has repaid more than 200% cut off date of amount disbursed 2 Loan period is more than 15 years & up to 20 @ 9% p.a. till years till cut off date or one who has repaid cut off date more than 150% & up to 200% of amount disbursed 3 Loan period is up to 15 years till cut off date @ 10% p.a. till but disbursed prior to 31.03.1998 cut off date 4 Loan is disbursed after 31.03.1998 @ 12% p.a. till date of application Total Amount disbursed plus Interest @ 9% to 12% till cut off date (31.03.2003 Disbursement for cases under Sl. No. 1,2,3 & till date of application for Sl. No. 4) less above Rs.20 Repayment since inception till date of application or Principal outstanding lakh and up as on date of application, whichever is higher to Rs.50 Sl.No. Condition Rate lakhs 1 Loan period is more than 20 years till cut off @ 9% p.a. till date or one who has repaid more than 200% cut off date of amount disbursed. 2 Loan period is more than 15 years & up to 20 @ 10% p.a. till years till cut off date or one who has repaid cut off date more than 150% & up to 200% of amount disbursed 3 @ 11% p.a. till Loan period is up to 15 years till cut off date but disbursed prior to 31.03.1998 cut off date 4 Loan is disbursed after 31.03.1998 @ 12% p.a. till date of application Total Amount disbursed plus Interest @ 10% to 13% till cut off date Disbursement (31.03.2003 for cases under Sl. No. 1,2,3 & till date of application for Sl. above Rs.50 No. 4) less Repayment since inception till date of application or Pr incipal lakhs outstanding as on date of application, whichever is higher. Sl.No. Condition Rate 1 Loan period is more than 20 years till cut off @ 10% p.a. till date or one who has repaid more than 200% cut off date of amount disbursed 2 Loan period is more than 15 years & up to 20 @ 11% p.a. till years till cut off date or one who has repaid cut off date more than 150% & upto 200% of amount disbursed 3 Loan period is up to 15 years till cut off date @ 12% p.a. till but disbursed prior to 31.03.1998 cut off date 4 Loan is disbursed after 31.03.1998 @ 13% p.a. till date of application NOTE: There will be no refund in whatsoever manner, in case one has already repaid to the Corporation over and above the Settlement amount as per the applicable parameters, indicated above, however, in such a case, the Settlement amount will be equivalent to the amount of Initial deposit. 5. OTHER NORMAL CONDITIONS (i) Miscellaneous expenses on L/A. accrued & remaining unpaid shall be paid along with the Settlement amount. Unpaid Misc. Expenses on L/A shall not be waived under any circumstances. (ii) FITL shall not be treated as principal. It shall be treated as a part of interest only. 6. PROCEDURE TO ARRIVE AT THE SETTLEMENT AMOUNT: Each loan disbursed is to be taken as a separate loan for calculation of the interest at the applicable flat simple rate. The age of each loan shall be determined by taking the weighted average of amount of each disbursement and periodicity of each such disbursement and Settlement formula under a Band shall be applied for each such loan separately if different loans fall under different age limits. Band/ category mentioned in the settlement formula will be decided on the basis of total disbursement for all loans availed by the loanee(s) excluding ineligible loans. Repayment by a loanee on account of a particular loan shall be the payment made by the loanee towards principal and interest only for that particular loan (in case more than one loan has been availed by the loanee) for settlement of dues. Payment on account of Misc. Expenses on L/A or Others, as may be, shall be ignored while arriv ing at the Settlement amount under this Scheme, however, unpaid Misc. Expenses on L/A as on the date of application and further Mics. Expenses to be charged and debited till the date of final payment of Settlement amount shall be payable over and above the Settlement amount arrived under applicable Settlement formula indicated above. 7. INITIAL DEPOSIT FOR OTS: Minimum 10% of the Principal outstanding as on the date of application including for cases which were settled under any of the OTS Scheme launched during 2005 - 06 irrespective of amount paid whether towards initial deposit and/or part payment against Settlement amount . 8. PAYMENT OF SETTLEMENT AMOUNT UNDER OTS: Payment of the Settlement Amount under this Scheme shall be as follows: (i) Either in one lump sum or within 30(thirty) days from the date of communication of the Settlement order with 3% Rebate on the Settlement amount against eligible loans only. OR (ii) In one lump sum or within 60(thirty) days from the date of communication of the Settlement order with 1% Rebate on the Settlement amount against eligible loans only. OR (iii) In installments as per the sequence mentioned below: (a) 25% of the Settlement amount as reduced by the initial deposit already made, shall be paid upfront along with acceptance letter within 60 (sixty) days from the date of communication of the OTS order. On failure to pay the up- front amount within 60 days, the settlement order shall stand automatically withdrawn/cancelled. (b) The balance Settlement amount (i.e.75%) shall be paid within a period of maximum one year (including above 60 days) from the date of communication of the OTS order in 10 (ten) equated monthly installments. On failure to pay the installments in time, interest @ 13.50% p.a. shall be charged on the defaulted amount for the period of default. Delayed period interest shall be payable simultaneously along with the defaulted installment of Sett lement amount But in case of default in payment of three consecutive installments, the Settlement order shall stand automatically withdrawn/cancelled. However, after cancellation of the Settlement order, if the unpaid settlement amount along with delayed period interest @ 15.50% p.a. (inclusive of penalty of 2%) for the defaulted amount and for the period of default is paid along with ineligible loan dues in full, maximum within one year, such case(s) be considered for revalidation of the OTS order(s) and for condonation of delay. In such cases, Managing Director is the Competent Authority to revalidate the OTS order and to condone the delay. (iv) Rebate for prompt payment, if any, as indicated above, shall not tantamount to any sacrifice to the principal outstanding and Miscellaneous Expenses as on the date of application. (v) The settlement order would indicate the exact due date of payment of installments both for Settlement amount against eligible loans and ineligible loans like Cyclone and RTDM loan dues after considering applicable rebate, separately, wherever applicable. 9. DEFINITIONS: (i) Date of communication of the settlement order: (a) Date of communication of the Settlement order is the date of issue of the Settlement order by the Competent Authority. (b) Due date(s) for payment of Settlement Amount is to be calculated from the date of communication of the Settlement order excluding the date of issue. (c) If the due date happens to be a public holiday for the Corporation, the next working day shall be accepted/ considered as the due date. (ii) Satisfaction of payment on due date(s): (a) If the payment on any due date is made through local draft/local bankers cheque / local pay order, it would be accepted as a payment on the said due date, provided that the said instrument(s) are credited within three working days from presentation of such instrument(s) and in such case no interest shall be charged for the period of delay in collection. (b) Since cheques are also acceptable instrument of payment, if the payment is made on due date through local cheque(s) it would be considered to have been paid on the due date, but the party shall have to pay interest for the period it takes for actual credit of such cheque(s), to the account of the Corporation. (iii) Balance Settlement Amount. Balance Settlement amount shall be the unpaid amount/ installments of Settlement amount lying unpaid as on a particular date. (iv) Delayed or default period:- Settlement amount is normally to be paid by due date(s) as calcu lated from the date of communication of settlement order. The period of default is to be calculated excluding the date of communication of the settlement order taking the due date(s) into account. 10. APPROVING AUTHORITY: (i) When the total disbursement(excluding ineligible DGM/BM loans) is up to Rs.30.00 lakh (ii) When the total disbursement(excluding ineligible Managing Director loans) is above Rs.30.00lakh and up to Rs.50.00 lakh (iii) When the total disbursement(excluding ineligible Executive Committee loans) is above Rs.50.00 lakh 11. SPECIAL INCENTIVES FOR PROMPT PAYMENT OF CYCLONE AND RTDM LOAN OUTSTANDING : A special rebate equivalent to one years’ Simple Interest on the disbursed amount or outstanding interest of such loan(s) as on the date of OTS application, whichever is lower, shall be allowed for prompt payment of such loan dues without further accrual of interest from the date of OTS application, prov ided the same are paid in 12 equated monthly installments within the overall maximum period of one year from the date of communication of settlement order as prescribed for payment of Settlement amount against eligible loans. However, on failure to pay either three consecutive installments or maximum within one year on this account, such rebate in shape of part waiver of interest shall not be available under any circumstances and the entire dues as per the terms and conditions of agreement shall become payable. 12. AUTHORITY TO CONSIDER APPEAL: If an applicant is aggrieved by the order of settlement, he may file an appeal before the Managing Director within fifteen days of communication of the Settlement order. Managing Director of OSFC would be Competent Authority to consider this appeal and take a final decision in the matter. However, in deserving cases, if he wants, he may refer any case to the Executive Committee for consideration. 13. RESIDUAL CLAUSE: The above guidelines will not be in supersession of the contractual obligation(s) subsisting between the OSFC and the borrowers as per the terms and conditions as contained in the loan agreement(s) executed by the borrower(s) in favour of the Corporation and thus not withstanding anything contained herein above, the Corporation may consider any matter pertaining to any loan case and take a decision on the basis of circumstances and merit of each case. It is further clarified that any borrower as a matter of right can not claim the benefits accruing from this scheme. 14. In case of any ambiguity / confusion during implementation of the Scheme, Managing Director is authorized to take suitable remedial measures for smooth operation / success of the scheme and necessary executive instruction shall be issued accordingly.
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