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									          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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