OTS SCHEME 2025
OTS SCHEME 2025
MPFC grants assistance to "Industrial Concerns" as defined in clause (c) of section 2 of "State Financial Corporations Act. 1951", which are located in the state of Madhya Pradesh.
However fee based services can be extended to units located in any part of the country.
In the definition, almost every type of manufacturing and/or process activity and related operations are covered. In addition to it, MPFC also provides assistance to activities in the service sector, as approved by the Industrial Development Bank of India (IDBI).
As per the provisions of the "State Financial Corporation Act. 1951", MPFC can grant assistance to only those concerns whose paid-up capital and fee reserves taken together do not exceed Rs. 20.00 crores. This limit is not applicable to non- fund based activities.
Subject to the limits prescribed under the various schemes, MPFC's total exposure to a single concern under all the schemes taken together shall not exceed Rs. 200.00 lacs in case of partnership and proprietary concerns, and Rs. 500.00 lacs in case of corporate entities.
MPFC grants loan against security only. The primary security for the loan is usually a first charge on land, building, plant and machinery etc. acquired/proposed to be acquired. In case of loan under consortium arrangements, pari-passu charge is accepted along with the other participating institutions.
Generally MPFC takes collateral security of land and/or building of the borrower or any third party in addition to primary security.
MPFC also has a floating charge on all the remaining assets of the borrower, subject to the charge in favour of the bankers for working capital.
Margin is the difference between the value of assets offered as prime security and the amount of loan. The margins prescribed for loans under various categories are as under:
| Category |
Backward
Districts |
Other
Districts | |
| Small Scale Industries | 20% | 25% | |
| Medium Scale Industries | 25% | 40% | |
| Hotel Industry | 50% | 50% | |
| Tiny Sector | 10% | 15% | |
| Composite Loan | NIL | NIL |
The minimum promotor's contribution envisaged in the project is worked out on the basis of Debt-Equity norm and the security margin norm applicable at the time of sanction of the loan. The debt equity ratio is the ratio of loan component and the equity contribution in the total project cost. The maximum amount of assistance shall be lower of the two amounts worked out on the basis of Debt-Equity norm and the security margin norm. The normal lending norm for debt- equity is 1.5:1, however in some specific schemes this norm may be flexible.
The entire promoter's contribution envisaged in the project is desired to be raised by way of capital before first disbursement of the loan installment. However in case the promoters are short of own capital, some amount may be raised as unsecured loans in the form of quasi-capital. The quantum is ascertained during the appraisal of loan proposal.
The period of repayment of loan is decided on the merits of each case, which generally ranges between 5 to 8 years. The principal amount of loan is payable normally in half yearly installments with an initial moratorium period of 6 months to two years depending upon the size of the project & stage of the implementation.
Interest is also normally charged on half yearly basis and the months of payment of interest & principal are kept different to even out the liability of the borrowers.
The assets offered as a security of the loan should be kept insured for their full value during the currency of the loan. The risk normally covered under the insurance are those relating to fire, riots etc., and the specific risks attributable to a specific project which the corporation may specify. The insurance policy should be taken in the joint names of the corporation and the borrower - with the usual mortgage clause. The first insurance policy and the subsequent renewals of the same should be sent to MPFC as soon as they are effected. In case the same is not sent in time. MPFC has a right to get the same insured on the cost & risk of the borrower unit.