Refinance Scheme for Credit Linked Capital Subsidy under Technology Upgradation Fund (RCLCS - TUF)
SIDBI vide its circular No.FI.4/2002-2003 dated April 22, 2002 has notified that the office of the Textile Commissioner, Ministry of Textiles (MoT), Govt. of India has launched "Credit Linked Capital Subsidy under Technology Upgradation Fund Scheme (CLCS-TUFS) for Small Scale Textile and Jute Industries". Under the Scheme, an option has been made available to the Small Scale Textile Industries to avail of either one time 12% Credit Linked Capital Subsidy or the existing 5% interest reimbursement under the Technology Upgradation Fund Scheme. CLCS-TUFS will be in operation from January 01, 2002 to March 31, 2004 and the loan sanctioned by the Nodal Agenices/eligible PLIs till the last date of duration of scheme would be eligible for availing the capital subsidy. CLCS-TUFS shall be available only for such projects where term loans have been sanctioned by the nodal agencies and its eligible PLIs. The Capital Subsidy will be worked out on the eligible investment amount under TUFS and would be released to the beneficiary unit on pro-rata basis alongwith disbursement of loan sanctioned for technology upgradation. SIDBI has been designated as the nodal agency for channelising assistance under the scheme.
All the eligible PLIs will have to execute a General Agreement with SIDBI for availing capital subsidy under the scheme, irrespective of the fact whether refinance is availed by them or not.
All the eligible PLIs will have to execute a General Agreement with their borrowers for availing capital subsidy from SIDBI against the term loans sanctioned under the CLCSS.
The 12% capital subsidy is to be worked out on the eligible investment under TUFS and would be released to the beneficiary unit on pro-rata basis alongwith each disbursement of loan sanctioned for technology upgradation. For the purpose, funds in the nature of advance money would be placed with the PLIs. The quantum of such advance money would be arrived at based on the estimate of requirement of funds to be furnished on quarterly basis. Further replenishment of funds would depend upon the utilisation of funds released earlier. H.O. of each PLI should ensure that the subsidy amount is released as per the guidelines under the scheme and furnish a certificate to that effect, before seeking replenishment of the funds. As the scheme is optional, PLIs would need to ensure that there is no duplication of claims.
Placement of funds by SIDBI would, however, be made through the respective account of the PLIs maintaining account with RBI. Request from the Corporate/Head Office of the PLIs concerned would only be entertained. For this purpose, a Nodal Officer may be identified by the PLIs and SIDBI would deal with these Nodal Officers for all the operational matters under the scheme.
Some of the operational guidelines for Credit Linked Capital Subsidy under Technology Upgradation Fund Scheme (CLCS-TUFS) for Small Scale Textile and Jute Industries issued by Govt. of India, Min. of Textiles, Mumbai :
1. Government has decided to provide an option to the Small Scale Textile and Jute Industries to avail of either 12% Credit Linked Capital Subsidy or the existing 5% interest reimbursement under the Technology Upgradation Fund Scheme (TUFS).
2. The proposed option would be extended to the small scale textile and jute industries of the following segments, which are already covered under TUFS, viz :
(a) Cotton ginning and pressing;
(b) Textile industry covering :
3. CLCS-TUFS will be in operation from January 01, 2002 to March 31, 2004.
4. Technology and other norms of TUFS are equally applicable to CLCS-TUFS cases for determining the eligibility under the scheme.
5. Subject to the norms prescribed under TUFS, the definition of small scale industry for the textile and jute sectors, would be as defined by the Department of Industrial Policy.
All other terms and conditions are as given in the above SIDBI circular.
Refinance Scheme for Textile Industry under Technology Upgradation Fund (RTUF)
SIDBI vide its Circular No.FI.31/2001-2002 dated March 21, 2002 has forwarded a copy of circular No.4(2001-2002 series) dated November 02, 2001 issued by the Ministry of Textiles, Govt. of India (MoT, GoI) regarding coverage of Captive Power Plant on Standalone basis, inclusion of second hand silk waste processing machinery, fluidised bed Coal Fired Boiler, eligibility of imported second hand embroidery machinery and imported reconditioned warp and raschel knitting machine under the scheme. PLIs may kindly keep these norms in view while considering the proposals for assistance under Technology Upgradation Fund Scheme (TUFS).
As regards item No.2 of the circular (eligibility of interest reimbursement under TUFS consequent to rescheduling the repayment) it is advised that since in terms of the Scheme, NPA accounts are not eligible for interest reimbursement, the guidelines issued by RBI from time to time on NPA classification and other related matters may be kept in view while considering requests for interest reimbursements in respect of rescheduled/restructured cases. A certificate may please be furnished to SIDBI in respect of rescheduled/restructured cases alongwith the claim seeking reimbursement confirming that the borrower has not been categorised as NPA in terms of RBI guidelines, in future.
Banks told to allocate 3% of new deposits for home loans
The RBI has directed commercial banks to allocate atleast 3 percent of their incremental deposits in fiscal 2002 to housing loans. This means atleast Rs.4,135 crore of bank finance will be available for housing loans in the current fiscal.
The incremental deposits of the banking industry stood at Rs.1,37,836 crore during 2001-02.
However, in reality, banks' funds flow into the housing sector was more in the last fiscal itself. In fact, the State Bank of India alone disbursed over Rs.5,000 crore in housing loans and ICICI another Rs.5,134 crore.
"It has been decided that for the current financial year - April 2002 to March 2003 - each bank should continue to compute its share of the housing finance allocation at 3 percent of its incremental deposits as on the last reporting Friday of March 2002 over the corresponding figure of the last reporting Friday of March 2001. This is the minimum housing finance allocation and there is no objection to banks exceeding this level, having regard to their resources position."
Banks are currently allowed to deploy their funds under the housing finance allocation through - direct finance, indirect finance or investment in bonds of National Housing Bank (NHB) or HUDCO.
Investments by banks in rated securitised debt instruments issued by any Special Purpose Vehicle (SPV) or entity, representing housing loans granted by approved housing finance companies (under the supervision of NHB), will also be reckoned for inclusion in the prescribed housing finance allocation of 3 percent. Banks have been aggressively getting into housing finance in the past one year.
NABARD launches new credit-linked scheme
The National Bank for Agriculture and Rural Development (NABARD) is to launch a new credit linked scheme for creation of 18.50 lakh tonne storage capacity in the rural areas of the country.
The main objective of the scheme is to meet the requirements of the farmers for storing farm produce, processed farm produce, agricultural inputs, promotion of grading and standardisation and quality control of the agri-produce, to improve their marketability and prevent distress sale immediately after harvest.
According to Shri Sukhbir Singh, Chief General Manager, NABARD, the scheme would help the entrepreneur arrange finances for constructing godown. "The godown can be built at any place outside the municipal corporation limits and will be required to have a minimum capacity of 100 MT. "
The subsidy under the scheme will be linked to institutional credit and will be available to projects financed by commercial banks, rural banks and other institutions eligible for refinance from NABARD.
A similar capital investment subsidy scheme for creation of onion storage facilities- onion medhas - is already under implementation by NABARD in association with NHB.
Govt. grants public FI status to NABARD
The Government has granted public financial institution status to NABARD paving the way for it to tap the capital markets for additional resources. The department of company affairs (DCA) in a notification issued on 30.09.2002 said NABARD has come under the ambit of sub-section (2) of section4A of the Companies Act with immediate effect, enabling the apex rural credit agency to function on purely commercial basis.
"The inclusion of NABARD as a public financial institution within the meaning of the Comapnies Act enables it to mobilise resources from the capital market as well as through external commercial borrowings. This also makes its functioning commercially competitive and viable".
Sanctions by financial institutions down 35%
There has been a near 35 percent fall in sanctions of the three top financial institutions i.e. ICICI, IDBI & IFCI during April-December, 2001 from Rs.53,754.88 crore during April-December 2000 to Rs.34,972.49 crore in the corresponding period last year.
Disbursements as a percentage of sanctions are estimated at 66.64 percent, amounting to Rs.23,307.09 crore.
Of the three institutions, IFCI saw the smallest chunk of disbursements, estimated at Rs.120.08 crore - which is 31.21 percent of the total sanctions of Rs.384 crore during April-December, 2001.
ICICI's disbursements are estimated at Rs.20,416.69 crore, accounting for 68 percent of its sanctions.
ICICI's retail business saw a spurt in sanctions which are estimated at over Rs.5,500 crore in April-December, 2001 - up 105 percent over the Rs.2,708.86 crore retail sanctions in the corresponding period in the previous year.
IDBI net dips 38.6%
IDBI has posted a 38.64 percent drop in net profit at Rs.424 crore for the fiscal ended March 2002 and declared a lower dividend of 15 percent compared to 45 percent for the preceding fiscal.
There has been a write off of Rs.2,500 crore against special reserves as a provision for bad and doubtful debts.
The income from operations was down by 9.93 percent to Rs.7,804 crore. IDBI has made a total provision towards bad and doubtful debts to the tune of Rs.3,273 crore during the year taking its coverage of non-performing assets (NPAs) to 54 percent. Besides, Rs.773 crore has been provided in the profit and loss account.
The total assistance sanctioned under all schemes stood at Rs.16,034 crore in 2001-02, while disbursements were at Rs.11,158 crore. Infrastructure financing amounts to Rs.3,141 crore (20.2 percent) as sanctions and Rs.1,471 crore (13.9 percent) as disbursement respectively.
SIDBI to mop up Rs.2,500 crore via local bonds, foreign loans
SIDBI plans to raise about Rs.2,500 crore through domestic bonds issues and foreign loans this fiscal to increase credit flow to the small scale sector.
SIDBI has been allowed in the budget to issue capital gains bonds under section 54EC of the Income-Tax Act and SIDBI is planning to gain Rs.1,000 crore through the bond issue this fiscal.
The capital gains bond, which would be floated on an "on-tap" basis from June-July onwards, is expected to have a maturity period of minimum three-five years.
SIDBI is also expecting to mop up Rs.900-1,000 crore this fiscal through its priority-sector bond issue, which mopped up about Rs.1,200 crore last fiscal against a target of Rs.1,000 crore.
SIDBI has sanctioned loans worth about Rs.10,000 crore and disbursed about Rs.6,500 crore to the SSI sector in 2000-01.
It has also signed MoUs with Rome-based International Fund for Agriculture Development (IFAD) for Rs.107 crore soft loan and another with Small Enterprises Assistance Fund for a venture capital fund with a corpus of Rs.100 crore.
SIDBI has a capital adequacy ratio of Rs.28 percent. The bank's share capital is at about Rs.450 crore. As on March 2001, SIDBI had a networth of Rs.37.71 billion and total assets of Rs.170.90 billion. Total income of the bank during the fiscal year 2001 was Rs.16.19 billion and the net profits at Rs.4.77 billion.
SIDBI net dips 41%
SIDBI net profit dipped 41percent to Rs.282 crore for year ended in March 2002 against Rs.477 crore in the previous year. The fall in the profit was also due to prepayment of loans which resulted in a fall in the outstanding advances from Rs.14,525 crore in March 2001 to Rs.13,160 crore in March 2002.
The profits before tax also fell by 15 percent to Rs.405 crore against Rs.477 crore in the previous year. The provision for income tax stood at Rs.152 crore and deferred tax exemption adjustment amounted to Rs.29 crore. Other FIs hold 53.34 percent stake in SIDBI, insurance companies have 13.33 percent and public sector banks hold 33.33 percent.
The earning per share has fallen from Rs.10.5 to Rs.6.27 in March 2002. The capital adequacy ratio stood at 43 percent. During the year, the FI issued 20 year convertible bonds at 8 percent in favour of government. This will qualify for tier I capital.
The total income of the institution fell from Rs.1,619 crore to Rs.1,559 crore. At the same time, expenses have gone up from Rs.1,133 crore to Rs.1,146 crore.
The institution has appointed A.F. Ferguson as consultants. The company will advise SIDBI on organisational restructuring and evolving alternate business and product mix.
The total assets of the bank stood at Rs.17,640 crore against Rs.17,090 crore in the previous year. The non-performing assets (NPA) of the institution stood at 3 percent, amounting to Rs.352 crore.
SIDBI plans technology bank this fiscal
SIDBI is to set up a technology bank this fiscal. An in-house committee has been set up to study the issue. The panel's report is in advanced stage and is likely to be ready soon.
The bank, which would be the first of its kind in the country, would source technology and export technology. It would be set up as a separate company under the Companies Act.
SIDBI will also focus on small innovations. "We have been made the nodal agency for funding small innovations. We are also in the process of initiating a micro venture-capital fund for small innovations.
Shri P.B. Nimbalkar, Chairman & Managing Director SIDBI said SIDBI's technology bureau for small enterprises had tied with the Asian and Pacific Centre for Transfer of Technology in order to access the latter's database and technology for small enterprises.
SIDBI also plans to fund infrastructure projects for which it has earmarked Rs.400-500 crore this fiscal. Last fiscal, the bank funded 8-10 infrastructure projects.
SIDBI to lend directly to SSIs
SIDBI has decided to aggresively get into direct lending to small scale industries (SSIs) as funds-flush banks have reduced their dependence on it for obtaining refinance. Refinance extended by SIDBI in fiscal 2001-2002 came down by 22 percent to Rs.6,300 crore compared with Rs.8,088 crore in the previous year.
"As the primary lending institutions' (banks') liquidity position is comfortable, they have reduced their dependence on SIDBI for their refinance requirements. Hence, we will be stepping up direct assistance this year through our 38 regional/branch offices " Shri P.B. Nimbalkar, CMD, SIDBI said. Almost 75 percent of the development bank's overall assistance is by way of indirect assistance. Indirect assistance is extended by way of refinance, granting line of credit, and rediscounting bills of primary lending institutions such as banks.
New areas identified by SIDBI for its direct financing thrust include annuity-based road projects that will directly benefit SSI clusters, entertainment industry (setting up multiplexes and water parks), shopping malls that exhibit SSI products and tourism-related activities.
The development bank at present extends direct financial assistance for setting up new SSI units, small hotels, hospitals and nursing homes, for developing infrastructure for SSIs, export credit for the SSIs and for market development activities.