1. The rate of
interest proposed on the loan should not be less than four percent above the prevailing bank rate being
the standard rate made public under section 49 of the R.B.I Act, 1934
2. The quantum of loan
along with other loans taken, if any, should not exceed 25 times of gross
salary drawn in the preceeding six months prior to making of the application.
3. No guarantee
commission shall be allowed to be paid to anyone in respect of the proposals.
The application should be accompanied by the following documents:
4. The
proposal should be approved at the meeting of the Board of Directors. A
certified copy of resolution passed should be submitted indicating the proposal
of the company, terms and conditions, interest of the directors/relatives if
any, clearly specifying (a) the rate of interest chargeable, (b) the schedule
and terms of repayment,(c) the loan is
not being made out of borrowed funds of the company (d) any other major or
important condition having bearing on the loan/financial position of the
company.
5. Wherever required,
members’ specific approval be obtained for the proposal The resolution along
with explanatory statement should contain all the relevant details as mentioned
in point 6 above. A certified copy of the resolution along with explanatory
statement so passed should also be enclosed.
6. The proposal should
be accompanied with the declaration that the company has not defaulted in
making repayments to the investors the amounts as and when they become due to
them.
7. Shareholding
pattern of the companies (applicant & borrower)
8. List of Directors
of the Board of both the companies (applicant & borrower companies wherever
applicable) and disclosing inter-se interest, if any.
9. Copy of draft loan agreement.
10. If the loan is
backed by any guarantees, then the name and particulars of the guarantors with
their consent.
11. Company should give
a declaration to the effect that funds proposed to be loaned are not required
for its working capital requirements at least for a year.
12. A certified copy of
the loan scheme for the employees of the company, if any.
13. Justification for
quantum of loan/guarantee or furnishing security by the company.
14. In respect of all proposals, a certificate from
the statutory auditors or a company secretary in whole –time practice to the
following effect be enclosed stating therein that: -
(a) the proposal is in conformity within the
provisions of Section 372A of the Companies Act,1956.
(b) the company has not defaulted in:-
- the repayment of any fixed deposits accepted by the company under Section 58 A of the Companies
Act, 1956 or part thereof or interest thereon
- Payment of dividend
- Redemption/repayment of debenture and timely payment of interest thereon
- Redemption of preference shares and
(c) the Company is regular in filing all forms / returns as required to be filed under the Companies Act
1956.
(d)the applicant company is not in any default on account of
undisputed dues of the Central Govt. e.g. Income Tax, Central Excise etc. For
this purpose, the status of disputed and undisputed dues shall be made
available so as to enable the Ministry to form a view in the matter vis-ŕ-vis
the coverage thereof available and assessed against the Net Worth/Profits of
the applicant company.
15. A NOC/ prior approval of public financial
institutions/ banks in case any term loan is subsisting.