Karnataka Bank Limited
LEGAL & RECOVERY
DEPARTMENT
NON-DISCRETIONARY ONE
TIME SETTLEMENT SCHEME
FOR MICRO AND SMALL ENTERPRISES (MSE) SECTOR
SALIENT FEATURES OF THE SCHEME:
A. Title :
The scheme is
called as `Non-discretionary One Time Settlement Scheme for Micro and Small Enterprises (MSE)
Sector’.
B. Applicability:
The scheme will
apply to Micro Enterprises and Small
Enterprises depending upon the amount of investment in Plant & Machineries,
investment in Equipments, as defined in the `Micro, Small and Medium
Enterprises Development (MSMED) Act 2006’ enacted by the Govt. of India on
16.06.2006 and notified on 2.10.2006, as detailed below:
(a) Enterprises engaged in the manufacture or
production, processing or preservation of goods:
i) A Micro
ii) A Small Enterprise is an
enterprise where the investment in plant and machinery (original cost excluding
land and building and the items specified by the Ministry of Small Scale is more than Rs.25.00 lakh
but does not exceed Rs.5.00 crore.
(b) Enterprises engaged in
providing or rendering of services:
These will include
small road & water transport operators (owning a fleet of vehicles not
exceeding ten vehicles), retail trade (with credit limits not exceeding Rs.10.00
lakh), small business (whose original cost price of
the equipment used for the purpose of business does not exceed Rs.20.00 lakh) and professional & self employed persons (whose
borrowing limits do not exceed Rs.10.00 lakh of which
not more than Rs.2.00 lakh should be for working
capital requirements except in case of professionally qualified medical
practitioners setting up of practice in semi-urban and rural areas, the
borrowing limits should not exceed Rs.15.00 lakh with
a sub-ceiling of Rs.3.00 lakh for working capital
requirements) provided investment in
equipment (original cost excluding land and building and furniture, fittings
and other items not directly related to the service rendered or as may be
notified under the MSMED Act, 2006) are as specified below.
(i)A Micro Enterprise is an enterprise where the investment in
equipment does not exceed Rs. 10.00 lakh.
(ii) A Small
C. GUIDE LINES FOR COMPROMISE SETTLEMENT:
1.COVERAGE:
a)These guidelines will
cover all NPAs in the MSE Sector which are NPA as on
31-03-2009 including SARFAESI, Suit Filed and BIFR accounts.
b) Cases of
willful default, fraud & malfeasance will not be eligible to be covered
under this Scheme.
2. Settlement formula:
Minimum
amount to be recovered:
|
Particulars |
Substandard Assets |
Doubtful Assets (DS1, DS2, DS3) |
Loss Assets |
|
NPA prior to 31.03.2004: |
|||
|
Accounts with book balance upto
Rs. 5.00 lakhs. |
70% of net balance as at 31.03.2009 plus expenses
debited subsequently, and outstanding lawyer’s bill/other expenses. |
60% of net balance as at 31.03.2009 plus expenses
debited subsequently, and outstanding lawyer’s bill/other expenses. |
40% of net balance as at 31.03.2009 plus expenses
debited subsequently, and outstanding lawyer’s bill/other expenses. |
|
Accounts with book balance above Rs.
5.00 lakhs |
90% of net balance as at 31.03.2009 plus expenses
debited subsequently, and outstanding lawyer’s bill/other expenses. |
75% of net balance as at 31.03.2009 plus expenses
debited subsequently, and outstanding lawyer’s bill/other expenses. |
60% of net balance as at 31.03.2009 plus expenses
debited subsequently, and outstanding lawyer’s bill/other expenses. |
|
NPA after 31.03.2004: |
|||
|
Accounts with book balance upto
Rs. 5.00 lakhs. |
Net balance as at 31.03.2009 plus expenses debited
subsequently, and outstanding lawyer’s bill/other expenses. |
80% of Net balance as at 31.03.2009 plus expenses
debited subsequently, and outstanding lawyer’s bill/other expenses. |
50% of net balance as at 31.03.2009 plus expenses
debited subsequently, and outstanding lawyer’s bill/other expenses. |
|
Accounts with book balance above Rs.
5.00 lakhs |
Net balance as at 31.03.2009 plus expenses debited
subsequently, and outstanding lawyer’s bill/other expenses plus interest @10% (simple) from the
date of NPA till the date of payment. |
Net balance as at 31.03.2009 plus expenses debited
subsequently, and outstanding lawyer’s bill/other expenses plus interest @ 8% (simple) from the
date of NPA till the date of payment. |
75% of net balance as at 31.03.2009 plus expenses
debited subsequently, and outstanding lawyer’s bill/other expenses. |
Note:
In case of loans with
book balance exceeding Rs. 5.00 lakhs
secured by equitable mortgage of immovable properties, the minimum settlement
amount will be the value of securities or amounts specified above, whichever is
higher. For this purpose, the properties shall be re-valued at the time of
submission of proposal by the branch.
3. Payment of OTS amount:
The application
for OTS under the Scheme should be accompanied by at least 10% of the OTS
amount upfront. Balance OTS amount should be paid within 2 months from the date
of communication of acceptance. In exceptional circumstances, the OTS
Permitting Authority may extend the period by another one month.
4. Approving
Authority:
The decision on
compromise settlement & consequent sanction of waiver or remission or write
off will be taken by the competent authority at Head Office under the delegated
powers, as applicable to other compromise settlements.
5.Time frame of the Scheme:
The Scheme will
come into force from 15.10.2009 and will remain in force up to 31.03.2010.
Applications received at the branches up to 31.03.2010 will be considered.