Finance Section

Procedure for disbursement of loan

The powers for disbursement of loan, except in Joint Finance cases, have been delegated to Branch Offices. In case of Joint Finance, disbursement is made only from Head Office. Disbursement is made after fulfillment of conditions stipulated in loan sanction letter and furnishing of information with regard to creation of assets. Action for disbursement is taken after execution of loan documents by the loanee. The promoters are required to raise and invest the capital contribution as per the sanction letter, which needs to be supported by a CA Certificate. The loan is disbursed on proportionate basis against the assets created as per the approved project. Creation of assets not in conformity with the approved project is generally discouraged but disbursement against them may also be made if changes are approved by the competent authority.

Disbursement against Land is released on the basis of receipts submitted by the party for purchase of land / conversion charges paid to State Govt./RIICO. Disbursement against Building is released on the basis of statement in the prescribed format certified by Chartered Accountant and valuation carried out by the officer(s) of the Corporation. Disbursement against Plant & Machinery is released after valuation and submission of bills and receipts. In case of plant & machinery purchased on credit, the Corporation, on a written request of the loanee, may make direct payment to the machinery supplier to the extent of loan admissible provided that the difference amount has been paid by the unit. The Corporation may also release admissible amount of loan to the Bank against the documents sent by supplier through his bank.

The Corporation also has a procedure for disbursement of loan in advance instalments for company cases, other than company cases where party has offered minimum 50% collateral security of the loan amount and cases where loan is more than Rs. 50 lac provided proposed advance instalment is sufficiently secured by prime security at the unit site and collateral security, if any. First instalment equivalent to 25% of sanctioned amount is released after ensuring that entire promoters contribution as share capital and un-secured loans has been raised and invested as per approved scheme. This has to be supported by a CA Certificate. Second instalment of 25% is disbursed after carrying out verification of the assets created and utilization submitted by the party supported by CA Certificate. Third instalment of 25% is released after carrying out valuation by the Technical Officer of the Corporation verifying utilization of loan released by the Corporation. After releasing 75% of the loan, no advance disbursement is made and disbursement is released after valuation in proportion of the assets created as per approved project. The utilization of advance instalments should be submitted within a period two months from the release of disbursement.The disbursement procedure may vary under specific schemes of the Corporation.