I. SCHEME FOR DIRECT ASSISTANCE:

      SSI units graduating out of the sector after implementation of the Scheme would also be covered.

PROMOTERS' CONTRIBUTION

Minimum
	20% of the cost of the project for rupee term loans.
	33.33% of the cost of the project in respect of foreign currency term loans.

DEBT EQUITY RATIO

Not to exceed
	2:1 for the company/firm/concern as a whole.

TERMS OF LOAN

Amount of Loan
	Amount of term loan shall be need-based, but not below Rs.50 lakh.
	In case of SSI units graduating out of the sector, the amount of loan shall be decided on a case to case basis.
Rate of interest
	As per commercial lending rates of SIDBI. Presently, within a band of
	- 11.75-14.75% p.a. for loan maturities upto 3 years; and   - 12.00-15.00% p.a. for loan maturities above 3 years
	Five percentage points of interest reimbursement shall be available to the units from Government of India through SIDBI in respect of Rupee loan. The scheme also provides for coverage of exchange rate fluctuation not exceeding 5% p.a. from the base rate in respect of foreign currency loan. Such coverage will be for the entire period of the loan provided exchange rate fluctuation is at 5% or exceeds 5%. The cost of forward cover premium for foreign currency loan limited to 5% p.a. on the base rate of exchange as an option (in lieu of 5% exchange rate fluctuation coverage) which may be exercised only once in each financial year of the project has been covered.
Security
	Exclusive charge over assets covered under the Scheme, first/second charge on existing fixed assets and other collateral security and personal guarantee(s) as may be required.
Period of Repayment
	Not exceeding 10 years, including moratorium upto 2 years, based on merits of individual case.
Upfront Fee
	1% of the loan amount.
Working Capital Requirement
	The unit should arrange with its bankers for need-based working capital/additional working capital facility.
PROGRAMME PERIOD
	The scheme would be in operation for a period of five years from April 1, 1999 to March 31,2004. Proposals sanctioned till the last date of the duration of the programme period will be eligible for interest incentive which would continue to be available till the loan is repaid as per the normal repayment period of loan.
INCENTIVE
	Five percentage points of interest reimbursement shall be available to the units from Government of India through SIDBI in respect of Rupee loan. The scheme also provides for coverage of exchange rate fluctuation not exceeding 5% p.a. from the base rate in respect of foreign currency loan. Such coverage will be for the entire period of the loan provided exchange rate fluctuation is at 5% or exceeds 5%. The cost of forward cover premium for foreign currency loan limited to 5% p.a. on the base rate of exchange as an option (in lieu of 5% exchange rate fluctuation coverage) which may be exercised only once in each financial year of the project has been covered. The incentive will be available during the period of loan as specified in the Letter of Intent and/or as may be specified in the loan document, in respect of default-free accounts.
PROCEDURE FOR SANCTION AND DISBURSEMENT
	The application for financial assistance in the prescribed form should be made to the nearest branch/regional office of SIDBI The borrowing unit will be required to execute a loan agreement in the prescribed form for availing of assistance under the scheme. The disbursement of loan would be made either directly to the machinery suppliers or through 'No Lien Account' to be opened by the borrower with its bank. The borrower will be required to lodge claims for reimbursement of interest reimbursement from SIDBI on a quarterly basis. SIDBI will settle the claims within a reasonable period of time, upon receipt of relative interest incentive from the Government of India. Till such time, the interest incentive is received from the Government of India, commercial lending rates of SIDBI shall be applicable. The credit decision of SIDBI as regards the proposal shall be final.

Note:

The parameters and guidelines are subject to change from time to time as may be required.

II. REFINANCE SCHEME UNDER TECHNOLOGY UPGRADATION FUND (RTUF):

      Such of the technology upgradation projects that avail term loan from Primary Lending Institutions would also be provided refinance assistance and interest reimbursement on the same terms and conditions as applicable under its direct assistance scheme. Full details in this regard can be obtained from the respective Primary Lending Institutions (PLI), comprising State Financial Corporations, State Industrial Development Corporations, Scheduled Commercial Banks, State Co-operative Banks and Scheduled Urban Co-operative Banks. The Surat Peoples' Co- operative Bank Ltd.(SPCB) and the Surat Textile Traders' Co-operative Bank Ltd. (STTCB).

      SSI units graduating out of the sector after implementation of the scheme would also be covered.

MODE OF ASSISTANCE
	By way of rupee term loan.

PROJECT COST
	All the eligible proposals from textile industrial units in the Small Scale Sector, irrespective of the cost of the project would be eligible for assistance.

FINANCIAL NORMS
(a)    Promoters' Contribution
	Minimum 20% of the cost of the project.
(b)    Debt Equity Ratio
	Not to exceed 2:1 for the company/firm/concern as a whole.

AMOUNT OF LOAN/REFINANCE
	Assistance under the scheme will be need-based. The refinance against rupee term loans provided by the PLIs under the scheme would be to the extent as may be decided by SIDBI from time to time (currently 100% in respect of loans).

TERMS OF ASSISTANCE

(a)   Rate of Interest

S.No Amount of assistance in respect of projects / activities eligible for assistance under the scheme Interest on Term Loan % p.a.(excluding interest tax) Interest on Refinance %p.a. i. Upto Rs. 50,000 With a maximum 8.75 ii. Above Rs. 50,000 and upto Rs. 2 lakh spread of 3% over and above applicable refinance rate 9.25 iii. Above Rs. 2 lakh and upto Rs. 25 lakh As may be decided by PLI 10.25 iv. Above Rs. 25 lakh - do - 10.75

The above rates are based on current lending rates prescribed by SIDBI. As and when the rates are revised by SIDBI, the rates of interest on refinance will also be revised. Reimbursement of five percentage points of interest shall be available to the units from Government of India through PLIs.

(b)   Security
	Exclusive charge over assets purchased out of the loan, first/second charge on existing fixed assets and other collateral security, as may be deemed necessary.

(c)   Period of Repayment
	Period of repayment will be fixed based on the repaying capacity of the borrowing concern. However, repayment of loan could be considered for maximum period of up to 10 years (inclusive of a moratorium up to 2 years), in case of existing or new projects, based on the merits of individual cases.

WORKING CAPITAL REQUIREMENTS
	The unit should arrange with its bankers for need-based working capital/ additional working capital facility.

PROCEDURAL ASPECTS
	It will be the responsibility of eligible PLIs to make necessary assesment, both as to the need for modernisation as also the quantum of financial assistance required. The eligible institutions should superscribe the refinance application "Technology Upgradation Fund Scheme for Textile Industries" to specifically indicate that the proposal is related to TUFS.
	Proposals covered under the Automatic Refinance Scheme shall be accompanied by a separate statement indicating that they relate to TUFS. The PLIs shall specifically mention in the statement that the proposals listed are for technology upgradation/modernisation of the respective industrial units and that the proposals meet the parameters contained in the GOI Resolution and guidelines on TUFS to the extent applicable to SSI units.
	As SIDBI is required to furnish a forecast to GOI for interest payments on quarterly basis, we advise that all the PLIs shall furnish interest forecast on quarterly basis to SIDBI, irrespective of whether refinance is availed or not. The PLIs shall furnish, through their nodal offices to our respective ROs/BOs, on or before 1 st April-June quarter, on or before 1 st July for July-September quarter so on and so forth in the format prescribed by SIDBI.
	SIDBI shall have right to inspect the books of the PLIs and the loan accounts irrespective of whether refinance is availed or not from SIDBI and the scheme / or call any other information as may be required by GOI.
	SIDBI will have right to recall from the PLIs, the entire amount of interest incentive/cover for exchange fluctuation paid and the PLIs shall undertake to refund the entire amount of interest incentive/ cover for adverse exchange rate fluctuations not exceeding 5% p.a. in respect of foreign currency loans of their assisted unit:-
	a) The scheme has not been operated by the PLI in terms of guidelines issued by GOI from time to time; or b) Either during implementation and/or currency of the loan, accounts do not conform to the policies, procedures and guidelines laid down by GOI/SIDBI, from time to time.
	The PLIs are required to furnish data in the proformae prescribed by Textile Commissioner (TXC) - 4 proformae having periodicity of 1 monthly and 3 quarterly reports. The PLIs are requested to send a consolidated progress report of all the branches of the PLI concerned as per the prescribed proformae, separately for SSIs (SIDBI as nodal agency) and medium/large scale units (IDBI as nodal agency) w.e.f. March 2000. The quarterly information has to be sent in the proformae II to IV alongwith the monthly proformae-I. Such information may be furnished monthly/quarterly in prescribed proformae to the office of TXC, invariably before the 10th of following month, irrespective of whether assistance has been sanctioned during month/quarter or not. Copies of the data in respect of small scale sector being sent to the TXC should be forwarded to SIDBI. The information could also be sent to SIDBI through e-mail at the address mailto:rtuf@sidbi.com
	TXC has allowed contingency provision to the maximum of 5% (on actual basis) as eligible for coverage under the scheme separately in respect of Plant & Machinery and other investments allowed under the scheme.
PROGRAMME PERIOD
	The scheme would be in operation for a period of five years from April 1, 1999 to March 31, 2004. Proposals sanctioned till date of the duration of the programme period will be eligible for interest reimbursement which would continue to be available till the loan is repaid as per the normal repayment period of loan.
TERMS OF INTEREST REIMBURSEMENT
	The interest incentives will be made available to eligible SSI units through SFCs, SIDCs and Scheduled Commercial Banks (irrespective of whether they avail refinance or not). However, all state/other Co-operative banks, except SPCB AND STTCB, have been made eligible to channelise such incentives only in respect of those cases where refinance is also claimed from SIDBI. Complete information as per the format prescribed need to be furnished for the purpose of considering reimbursement of interest incentive by SIDBI Incomplete application will not be considered by SIDBI in as much as SIDBI as nodal agency would continue to be responsible for verifying the interest reimbursement claims of the PLIs, and actual reimbursement thereof.
	Both new and existing industrial concerns in the SSI sector will be eligible for interest reimbursement of five percentage points on the interest payments made by them on the loan outstanding to the PLIs in respect of loans sanctioned to them on or after April 1, 1999. The units will be eligible for interest reimbursement from the date of disbursement of loan by the PLIs during the period of loan as specified in the Letter of Intent and/or as may be specified in the loan document.
	The units which are in default in payment of principal/interest will not be eligible for the interest reimbursement.
	The PLIs may lodge their claims for reimbursement of interest incentives from SIDBI on a consolidated basis once every month. However, such claims in respect of a unit shall remain to be on quarterly basis. SIDBI shall settle the same within reasonable period of time upon receipt of relative interest reimbursement amount from Government of India (GOI). Till such time, the interest incentive is received from the GOI, commercial lending rates of the PLI shall be applicable.
	The credit risk under the scheme will not be borne by SIDBI. The PLIs will make their own commercial judgement while appraising the project. The credit decision of the PLIs will be final.
	The decision of SIDBI as regards coverage of projects for extension of refinance under the scheme shall be final.
FINANCIAL NORMS FOR DIRECT FINANCE BY CO-OPTED PLI'S
	SIDBI would not insist on adherence to refinance norms such as promoters' contribution, DER, security, period of repayment in respect of cases where refinance has not been availed under TUFS.
	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 for direct finance by the SIDBI.
	Other norms and criteria regarding technology,machinery,other investments,etc.as prescribed by GOI would, however, be strictly adhered to by the PLIs while considering assistance under TUFS.
	There will be no cap on direct finance by co-opted PLIs.Thus, they can lend directly to the textile units upto the SSI limit or even larger amounts to existing SSI units graduating out of SSI sector.

The parameters and guidelines are subject to change from time to time as may be required.