i/ A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs 25 lacs.

ii/ A small enterprise is an enterprise where the investment in plant and machinery is more than 25 lacs but does not exceed Rs 5 crores;

In case of the above enterprises, investment in plant & machinery is the original cost excluding land & building and items specified by the Ministry of Small Scale Industries vide its notification No. S.O.1722(E) dated .5.10.2006(Annex 1).

i/ A micro enterprise is an enterprise where investment in equipment  does not exceed Rs 10 lacs .

ii/ A small enterprise is an enterprise where investment in equipment is more than  Rs 10 lacs  but does not exceed Rs 2 crores.

All advances granted to units in the KVI sector, irrespective of their size of operations, location and amount of original investment in plant & machinery will be covered under the small enterprise segment within the priority sector.

MRA: The minimum recoverable amount (MRA) under these guidelines  will be 100% of the book outstanding in the account as on the date on which the account had been classified as Doubtful /Loss, PLUS litigation expenses & other expenses incurred or become due which include present & future expenses on account of SARFAESI action/Recovery Agents/Detective Agents etc. PLUS DICGC/ECGC/CGTMSE claim appropriated in the a/c, if any which is to be refunded back  MINUS recoveries made in the account after the date of classification of the account as Doubtful/Loss. In technically written off a/cs, the MRA will be the amount as arrived at above PLUS the  amt. technically written off.

NOTIONAL RECOVERABLE  DUES:

Please note that the above calculations are ONLY for the purpose of arriving at the notional concessions involved in the case.

(III)PAYMENT:

The amount of settlement arrived at as above, shall preferably be paid in lump sum.  In cases where the borrowers are unable to pay the entire amount in lump sum, at least 25% of the amount of settlement shall be paid upfront within 30 days of the communication of approval of settlement to the party and the balance amount of 75% should be recovered in instalments within a maximum period of one year. Interest @ existing PLR, on simple basis, shall also be recovered from the date of settlement up to the date of final payment. In such cases, cheques towards the repayment of settled amount are to be obtained in advance. In case the entire amount is paid within 30 days, no interest would be payable.

In order to bring transparency and fairness in decision making, the official who had allowed the last sanction/enhancement of credit facilities to the borrower:

The fact/reasons of his non participation in the relative meeting, shall be recorded in the minutes/office note.

The Branches/ZOs are advised to specifically record the name of last sanctioning/enhancing  official in the settlement proposal form, without which no proposal should be considered/sanctioned by the competent authority.

The above guidelines for one time settlement of NPAs are applicable without discrimination.  Branches should give wide publicity to the scheme and give immediate notice to all the eligible defaulting borrowers latest by 30.11.2009 to avail of the opportunity for one time settlement of their outstanding dues in terms of these guidelines

1. As the above scheme is time bound and is valid up to 31.12.2009( last date of receipt of applications from the borrowers), the ZMs are required to personally monitor the scheme for its effective implementation.
   
   
2. ZMs shall be submitting the monthly consolidated data of their Zone giving details of settlements made to MIS Section at HO Law & Recovery Department.

VIII. CASES NOT COVERED UNDER THE POLICY FOR MSE SECTOR.

Any deviation from the above settlement guidelines for any borrower shall be made only by the Board of Directors.

It may, however be ensured that no deviations are to be encouraged and only cases falling within the framework of  above Guidelines are entertained.

Different a/cs belonging to a group can also be dealt with individually but the connected/ common securities shall not be released till all the accounts of the group are adjusted.

No further credit facility in any shape whatsoever will be allowed to the borrower or guarantor(s) in future, except where the borrowers have suffered losses due to riots etc.  In case, the guarantors are already availing credit facilities and their accounts are classified as "Standard" no further enhancement will be allowed.

Fresh/additional credit facility in case of guarantor(s), where the guarantor(s) are not availing credit facilities or are already availing credit facilities, will be considered only if the guarantors themselves were instrumental in getting recoveries through settlement and their accounts ( if already availing credit facility) were classified as standard. Such cases, as per this para are to be dealt with at Head Office only.

It is clarified that the cases involving i) waiver of penal interest and overdue interest, ii) rectification of the interest rates charged in the past, iii) concessions in the future rates of interest only under a rehabilitation package of a sick industrial company/weak unit/sick SSI unit, iv) adjustment of an account under an interest subsidy scheme/other subsidy schemes announced by the Government and v) refund of DICGC/ECGC guarantee fee wrongly debited to the account will not be considered as settlement cases for the purpose of this Para and hence will continue to be  eligible for credit facility in future.

It should be ensured that Staff accountability is examined before considering the proposal for settlement and a certificate on the enclosed format is placed on record.

We hope that the above guidelines will facilitate the field functionaries in effecting maximum recoveries/reduction in NPAs, keeping in view the spirit in which the above guidelines have been issued.