In general the installments of interest & principal fall due
for payment on quarterly basis. The months of payments of
interest & principal are normally kept separate to avoid
burden on the borrower.The due dates of payments are specified
in the loan documents.
The payments made by the borrowers are
appropriated in the following order: firstly towards other
charges, followed by arrears of interest, and lastly towards
principal. In case of multiple loan, the amount received
shall be appropriated first towards loan overdues having
lower rate of interest.
The borrowers are expected to be well aware about the due
dates for payment of instalments. However, to facilitate them. It
is a usual practice of the corporation to issue demands
for such payments well in advance.
In case due to postal delay or any other reason, the demand
is not received by the borrowers, they should contact the concerned
field office and deposit the amount well in time to avoid penal
interest and other consequences of default.
It may be noted that non-receipt of demand notice cannot be taken
as an excuse for default.
The payment of the dues can be made at the field office, or
at head office but as far as possible the payment should be
made at the concerned field office only.
In case the party fails to pay the
dues to the corporation in time, due to some genuine reason,
the related facts & circumstances should be informed to the field
office with full details.
Depending upon merits of the case, postponement of some particular
dues, for some period, may be allowed; or the facility of the reschedulement
of the entire outstanding may be granted.
However, grant of such facilities is solely at the
discretion of the corporation. It is necessary that the
borrower should remain in regular touch and continue to keep
the field office informed of the progress and working of the
concern at regular intervals.
In case, assisted units turnout to be sick, and the promoters are very keen
and ready to revive the unit, the corporation extends a helping hand
for revival of such units - strictly on merits of each case, and if the
corporation feels that the operations of such a unit can still be made viable.
The benefits, which may be passed on in such cases,
generally include reschedulement of loan accounts, funding of
overdue interest, grant of loan for balancing equipments,
approval for change in the management, recommendation to other
financial institutions, Bank,Govt. etc.
Penal interest is charged in case of default. This interest is
over and above the contracted rate.
In case
the default becomes a chronic & persisting feature or the
corporation feels that the dues are willfully not being paid,
or the management is unable to run the units, the corporation
is constrained to take painful decision of acquiring the
assets U/S 29 of the SFC'S Act,1951 and dispose them off by
auction/sale to recover the outstanding dues.
In case the sale proceeds of the assets are less as compared
to the outstanding, the corporation is free to initiate legal
proceeding to recover the balance amount from
promoters/guarantors personally.
Recently the Government of Madhya Pradesh has also conferred
the powers of Tahsildar on the Dy.General Managers of MPFC.
This has been done for the limited purpose of recovery of MPFC dues
as arrears of land revenue to the extent of issuing Revenue Recovery
Certificate (RRC) under the provisions of the M.P.Land
Revenue Code, 1959 and the Madhya Pradesh Lok Dhan (Shodhya
Rashiyon Ki Vasuli) Adhiniyam, 1987. RRC's are also being
issued in favour of officers at Collectorate and Collectorate Officers
are recovering the MPFC dues - as dues of Land Revenue, from the
defaulting borrowers and their guarantors.
It is one of the usual conditions for grant of loan that the
change in the constitution and or management should not be
done by the concern.
However if it becomes necessary in the
interest of the project, a written request should be made to
the concerned field office and the desired change may be
affected only if the approval of the request is granted in
writing.
On the request of the regular borrowers, the corporation
usually permits second charge on fixed assets in favor of the
Bankers.
Defaulting borrowers are reviewed by the corporation both at
field offices and at Head Office.
Default review committee (DRC) at Zonal level considers the cases
for reschedulement of loan account, granting of rebate, issue
of legal notice, take over of the unit, change in management,
disposal of units, etc.
The zonal level DRC considers cases having sanction amount less
than Rs. 20.00 lacs, while those having a higher sanction amount
are dealt with by H.O.
Cases of disposal of taken over units where assistance
originally sanctioned is above Rs. 5.00 lacs, are considered
by the standing committee(SC), constituted in the Head Office of
the corporation.
The units are disposed off after giving news papers advertisement,
calling offers from intending purchasers and subsequent negotiations.
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