TIIC Working Capital Scheme
TIIC Working Capital Scheme
Tamil Nadu Industrial Investment Corporation Limited has launched the WCTL for Job Work scheme. Under this scheme, the Government provides term loan to MSME assisted and non-assisted job work units to meet their working capital or additional working capital requirements. In this article, we look at the WCTL for Job Work scheme in detail.
Job Work means processing or working on raw materials or semi-finished goods supplied by the manufacturer to the job worker.
Purpose of the Scheme
The purpose of the WCTL for job work scheme is to provide working capital funds against consumables and bills receivable of the job work nature.
The following are the eligible conditions to obtain a loan under the WCTL for Job Work scheme:
- To obtain a working capital term loan, the net worth of the units must be positive and no cumulative losses.
- The units must be in the standard assets category continuously of TIIC or Banks for the last two financial years.
- The government provides a working capital term loan for units who earned a net profit for the last two financial years.
- The unit should be in existence and operation for the past two financial years to apply for the contractor loan scheme.
- The units set up within their funds are only eligible for both term and Working capital term loan.
Quantum of Loan
The minimum assistance under the WCTL for Job Work scheme will be of Rs.10 lakhs, and the maximum assistance will be Rs.50 lakhs per unit.
The Promoter Contribution under the WCTL for Job Work scheme will not be less than 25% of the working capital assessed.
Debt Equity Ratio
The debt-equity ratio fixed for the borrowers will be 2:1, including working capital term loan.
Rate of Interest
The rate of interest imposed for the loan amount will be at the rate of 12.45%.
- Interest has to be provided either on a monthly or quarterly basis.
- Term Loan and Subsidy loan against Credit Linked Capital subsidy will possess an interest rate that applies to Term Loan.
- In the event of default, the penal interest rate of 2.50% per annum will be imposed for the defaulted period.
In the case of document rate of interest on a loan amount is equal to or less than the current rate of interest, no preclosure premium is obtained.
For other cases, Pre-closure premium of 1% per annum will be received for pre-closure of loans by borrowers.
The borrower has to remit the registration fee at the time registration of the application.
- The Registration Fee of Rs.5,000 has to be paid if the loan is approved by the Branch Sanction Committee (BSC).
- The Registration Fee of Rs.25,000 has to be paid if the Head Office sanction the credit.
The applicant is required to make an investigation fee before the loan proposal is sanctioned by the concerned sanction committee.
|Amount of Loan||Investigation Fee|
|Loans up to Rs.10 lakhs||Rs.5000|
|Loan amount exceeding Rs.10 lakhs and up to Rs.50 lakhs||Rs.10000|
Note: 50% concession in investigation fee will be provided for applications received in Loan Melas or Customers meets, which is organised by TIIC.
The maximum repayment period for the Working capital term loan is 42 months, including a moratorium of up to 6 months for first-time assistance, and the repayment can be made in equated monthly instalments (EMI).
Quantum of Collateral Security
The securities acquired by the TIIC for lending the loan amount are specified here:
|Category of Units||Percentage of Collateral|
|Assisted units of TIIC without any bank finance or bill finance facility||100%|
|Assisted units of TIIC with any bank finance or bill finance facility||150%|
|Non-assisted units of TIIC with or without any bank finance or bill finance facility||150%|
Refund for Rejection of Loan
In the event of a denial of the loan application, the corresponding fee will be refunded as below:
- If the applicant cancels the proposal before sanction, the investigation fee provided as the 2nd instalment is considered for refund at the rate of 50% on fees paid. However, the initial registration fees shall not be refunded.
- If the applicant or the corporation rejects the loan application after processing the loan, no reimbursement will be allowed.
- No refund of investigation fee will be provided if the borrower availed for 50% concession already.
The following are the documents to be submitted along with the application form.
- Copy of ROC/ MSME / Company Identification Number/SIA Acknowledgement.
- Copy of the Firm Registration and Partnership Deed.
- Copy of the Incorporation Certificate and Memorandum of Association (MOA).
- Certified copy of the sale deed or lease deed executed for the factory premises.
- Copy of the building plan approval.
- Copy of the Industrial License, if any.
- Copy of Tamil Nadu Pollution Control Board (TNPCB) Clearance.
- Invoices of the plant and machinery procured duly attested by the authorised signatory of the company or concern.
- Terms and conditions of term loan or working capital loan sanction, if applicable, extended by Financial Institution or Bank.
- The certificate is needed from the Company’s Statutory Auditor if the companies incorporated under Chartered Accountant or ROC.
- In the case of any other firms, the authorised person who certifies the annual records for the amount remitted in building, land and Plant & Machinery as per the format has to be enclosed.
- Chartered Engineer’s Certificate for the amount spent on building, land and plant & machinery as per the prescribed format.
- In case of companies incorporated under ROC or Chartered Accountant, the commencement date of commercial production for the existing or new project has to be duly certified by the unit’s Statutory Auditors.
- In case of companies incorporated under ROC or Chartered Accountant, invoice along with certificate given by the Statutory Auditors has to be furnished.
- In the case of other firms, the invoice with the certified annual accounts of the concern of the company has to be enclosed.
- Certified copy of audited balance sheet, profit & loss account for the recent 3 years with the schedules has to be submitted.
- The documents for new or second hand imported machinery such as a Bill of Entry, copy of Letter of Credit, Bill of Lading, duty and details of clearing charges paid etc., has to be provided.
- For second-hand imported machinery, Chartered Engineer’s Certificate including the year of manufacture, country of origin, the reasonableness of the price, condition of the machinery and residual life of the machinery has to be submitted.
Note: All copies/certificates have to be duly attested by the Statutory Auditors or an authorised agent of the company or Chartered Accountant of the company.
Application Procedure for WCTL Scheme
The application can be initiated from IndiaFilings. Our Business Advisors will assist in availing these loans through the seamless and proven procedure.
For applying manually, the applicant has to visit TIIC office with relevant documents.
Post by Karthiga
IndiaFilings is India's largest online compliance services platform dedicated to helping people start and grow their business, at an affordable cost. We were started in 2014 with the mission of making it easier for Entrepreneurs to start their business. We have since helped start and operate tens of thousands of businesses by offering a range of business services. Our aim is to help the entrepreneur on the legal and regulatory requirements, and be a partner throughout the business lifecycle, offering support at every stage to ensure the business remains compliant and continually growing.