Loans under the TUFS will be provided on the following terms and conditions:

Amount of loan:

The assistance will be need-based subject to the attainment of minimum economic size.

Promoters' Contribution

Minimum of 20% of the cost of the scheme, relaxable to 17.5% in extremely deserving cases.

Rate of Interest:

(a) Rupee loan       Loans under TUF shall carry interest at normal applicable rates of the lending institutions prevailing at the time of sanction/execution of loan documents. Ministry of Textiles, Government of India will provide interest reimbursement of 5% p.a. 15 days in advance of the quarterly due date, which would be credited to the loan account of the borrower availing of assistance under TUF on due dated (b) Foreign Currency loan       As applicable for normal FC loan. However, Ministry of Textiles, Govt. of India would provide a cover for exchange fluctuations not exceeding 5% p.a.

Period of interest reimbursement:

      Interest reimbursement of 5% as also cover for exchange fluctuation will be available during the period of loan as specified in the Letter of Intent or as may be specified in the loan document. In case of subsequent extension of the repayment period, no incentive towards interest/exchange fluctuation will be available for the extended period.

Upfront fee:

      1.05% of the amount of the loan.

Period of loan:

      To be linked to repaying capacity. Normally not exceeding 10 years (inclusive of the moratorium). Graded instalments starting with smaller instalments and rising in later years will also be permitted.

Security:

      First charge of fixed assets. Additional security, such as personal/ other guarantees and / or pledge of promoters' shareholding might be stipulated by the lender, if considered necessary.

Conversion option:

      Not applicable, except in case of defaults.

Debt-equity Ratio:

      1.5:1, relaxable in deserving cases.

            One of the main requirements for sanction of assistance under the TUF will be the availability of competent management to the unit concerned to carry out the project implementation and also to manage the operations of the unit efficiency. Towards this end. IDBI may stipulate conditions relating to broad-basing of the Board, appointment of senior technical/financial executives, professionalisation of the management and constitution of such committees as may be considered necessary.

            Since the success of the project would crucially depend upon the availability of adequate working capital to achieve the full benefit of the modernisation programme. IDBI would like to be assured that the units have made adequate arrangements with their bankers for meeting working capital requirements at reasonable rates of interest.

            In view of likely expectation of large inflow of applications and the volume of assistance, it is proposed that other All India Financial Institutions viz. ICICI, IFCI and IIBI and some select banks will also receive applications and sanction and disburse assistance to the borrowers as per the TUFS norms. IDBI, being the nodal agency, will co-ordinate with other institutions. However, the lead bank will co-ordinate in respect of other banks and furnish the information to the Textile Commissioner direct.

            Applications for assistance under the TUFS from non-SSI undertakings may be submitted in the prescribed form available from IDBI/ICICI/IFCI/IIBI. The applications duly completed (5 copies) may be submitted to any one of the four institutions either at their Head Offices or Zonal/Branch Offices.

            Every effort will be made to process applications and sanction assistance applied for as expeditiously as possible. As a general rule, IDBI endeavours to sanction assistance sought for within 2 months from the date of receipt of complete information.

            Co-opted PLIs lending under direct finance can adopt their own financial norms for sanction of TUFS loans. However, such norms can not be stricter than those outlined by the IDBI.