Professional Documents
Culture Documents
Objective: To provide long term finance for the establishment of new industrial, infrastructure,
agri-horticulture, fishery and animal husbandry projects as well as expansion, diversification and
modernization of existing ones.
Types of Assistance: Term loan, direct subscription/underwriting of equity and debt instruments,
provide financial guarantee and participate in deferred payment guarantee.
Eligibility: Industrial concerns conforming to the definition in Section 2 (c) of the IDBI Act,
Infrastructure, Agro-horticulture, Fishery and Animal Husbandry projects.
Project Cost: Minimum assistance: NEDFi ordinarily finances projects with loan component of
Rs.25 lakh and above. However smaller projects in innovative fields and in the hill states are also
considered.
Maximum assistance: Normally, NEDFi can consider up to maximum exposure of 10% of paid
up capital & reserves. However, it can consider projects requiring higher investment in
consortium with other financial institutions and banks.
Nature of assistance: Rupee Term Loan
Promoters contribution: 30-40% of the total project cost. However, in the case of consortium
financing it will be at par with the norms of All India Financial Institutions.
Debt Equity Ratio: Ordinarily 1.5 : 1
Interest Rate: Based on Prime Lending Rate fixed from time to time. Actual rate within the
prevailing rate band depends upon creditworthiness of borrower and risk perception. As on date,
the prevailing interest rate is 15% per annum. There is provision for 1% rebate on interest rate for
timely repayment on due dates.
Up-front fee: 1% of the loan amount sanctioned
Security: First charge on movable and immovable fixed assets.
Documentation:
1.
2.
3.
4.
Loan Agreement.
Deed of hypothecation.
Personal guarantee from main promoters, wherever required.
Undertaking from the promoters for
o Meeting overrun/shortfall in the project cost/means of financing
o Non-disposal of shareholdings by the promoters
Objective
The NEEF has been created to help first generation entrepreneurs who are short of equity and
are unable to meet the conditions of banks/ financial institutions. Special focus is given on
agricultural and horticultural activities and activities with local raw material.
Eligibility
New projects in tiny & SSI sectors, expansion, modernization and diversification of existing units
etc. Benefits can be extended to Proprietorship & Partnership Concerns and Companies.
Technical qualification of the promoter in the relevant field is a pre-requisite.
Nature of assistance: Quasi Equity
Project Cost:
Extent of Assistance:
Up to 25% of the project cost, subject to a maximum of Rs.3.75 lakh. NEEF assistance may be
supplemented with normal NEDFi loan component together with one cycle of working capital in
deserving cases.
Promoters contribution:
Interest rate:
Minimum 15%
Repayment period:
Security:
Pari-passu charge with Banks/SFCs/ SIDCs on the assets of the concern/company; collateral
guarantee if needed but not insisted for deserving cases; personal guarantee from the promoters.
The people in North East India are predominantly in the farming sector. For trading and
production purposes, small borrowers still depend on the local moneylenders whose interest rates
are normally very high. It becomes rather heavy on the borrowers who are poor, illiterate and do
not understand the intricacies involved in formal lending. Therefore, they do not approach banks
despite their needs.
With the help of Non Government Organisation (NGOs), individuals can be organised under Self
Help Groups (SHGs) for the purpose of on-lending from financial institutions. Also, linkages can
be established for networking with these SHGs with the formal banking sector.
Despite the vast expansion of the formal credit system in the country, it has not been able to
cover adequately the need of small loan requirement of the rural poor. The banks have not been
involved much in lending of this kind as it encompasses high risk & high transaction cost and too
many small borrowers. Faced with such constraints, the unreached small borrowers can be
helped by NEDFi through the provision of small loan through intermediaries. It will lead to creation
of informal savings and help in inculcating the habit of borrowing and repaying.
NEDFis Objective
There is a need to target small and mid size agriculturist, self employed personnel, entrepreneur;
not so much as a measure of poverty alleviation but as a measure of productivity/efficiency
building mechanism to support the greater goal of overall development of the region.
Hence, NEDFi would look towards developing & supporting NGOs/Voluntary Agencies (VA) with
good track record for on-lending to the "needy" for taking up productive activities. The program
would envisage extending financial assistance to NGOs/VAs for on-lending to the people for selfemployment projects that generate income, allowing them to care for themselves and the
families.
The Proposal:
The approach would focus on identifying micro finance institute (MFI) as long tern partners and
providing credit support for their micro credit initiatives. The MFIs may be well-organised Non
Government Organisation (NGO) with good networks or other micro finance organisations. The
MFIs would be selected on the basis of their credibility, track record, professional expertise and
management practices, credit rating, field visits etc.
Operational Strategy:
The approach to assistance under NMFS will be different from that of conventional lending under
other programs of NEDFi in as much lending decisions under NMFS will be governed by the track
record, capabilities of reach of MFIs rather than the security offered and promoters stake.
Operational Modalities:
The operational modalities of the NMFS will be as follows:
Eligible Borrower
Well managed NGOs/VAs/Cooperative Societies, Village Councils that::
are in existence for at least 3 years
have experience in developing SHG
Terms:
Minimum amount that can be given to a SHG is Rs 20 thousand and maximum up to Rs.
4 lakh.
NEDFi would lend the amount at Prime Lending Rate (PLR) + 0.5 % (administrative
charge).
Repayment period by the NGO would depend on the projects. Maximum period is 5 years
including a reasonable moratorium period. The repayment period by the ultimate
borrower will be 1-3 years.
Some feasibility study of the projects sent by the SHGs should be done by the NGOs
before being accepted by NEDFi. The individual projects would be prepared by the NGOs
with details.
NEDFi would help SHGs, NGOs in identifying activities and in conducting seminars,
trainings, workshops etc..
Activities to be financed:
Documentation:
Loan Agreement.
Deed of Hypothecation.
Promissory Note.
Resolution of executive body accepting the terms and conditions for availing the loan.
Security:
Objective:
This scheme is aimed for those units currently facing problem due to lack of working capital support from
commercial banks, but can be made viable with the infusion of fresh funds by way of one time core
working capital assistance.
Eligibility:
1. The scheme is meant for limited companies which are industrial concerns as defined in IDBI Act.
2. Those limited companies which have not got any working capital:
a.
b.
c.
d.
e.
i.
ii.
iii.
iv.
v.
Contact
Equipment Finance
Objective
For acquiring specific machinery/equipment
Eligibility
Financially sound companies
Should be in the operation for a period of 5 years, should be making profit for the last
three years.
Must have a good track record.
Exclusion
Assistance under the scheme will not be available for the following:
Extent of Assistance:
70% of cost of equipment plus taxes/duties, transportation and installation charges. Minimum:
Rs.25 lakh Maximum: Rs.10 Crore
Promoters contribution: 30%
Debt Equity Ratio: 1.5:1
Current ratio: 1.33:1
Interest coverage: 2:1
Interest rate:
Based on Prime Lending Rate fixed from time to time. Actual rate within the prevailing rate band
depends upon creditworthiness of borrower and risk perception.
Upfront fee: 1% of loan amount sanctioned
Repayment period: 3 to 6 years
Security:
Extension of first charge or hypothecation of assets financed. Personal guarantee/ Corporate
guarantee
Documentation:
Loan Agreement
Deed of hypothecation
Demand promissory note