Crafting Rural India’s Destiny A new policy initiative on Loan and Loan cum Grant Based projects in Rural Non Farm Sector activities
National Bank for Agriculture & Rural Development 54, Wellesley Road, Shivajinagar, opp. Engginering College, Pune - 411005.
National Bank for Agriculture & Rural Development
DEED OF HYPOTHECATION
Annexure - V
(To be stamped as per local laws) THIS DEED is made at this the
day of
2012
IN FAVOUR OF
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT, a body corporate constitutedunder an Act of Parliament, known as the National Bank For Agriculuture and Rural Development Act, 1981, having its Head Office at Plot No. C-24, G-Block, Bandra-Kurla Complex, Mumbai and one of its Regional Office at Pune, Maharashtra among other places (hereinafter referred to as “NABARD” which expression shall, unless repugnant to the context or meaning thereof, includes its successors and assigns) BY Name of the NGO/Society etc. through Shri Chief Executive Officer, a Society registered under the Societies Registration Act, 1860, having its Registered Office at (give the address), Maharashtra (hereinafter called “the Borrower” which expression shall, unless repugnant to the context or meaning thereof be deemed to include its successors and permitted assigns). WHEREAS NABARD is an apex level financial body and the Borrower at present carrying on the business of enabling artisans, mainly women, self-sustainable in production and marketing of handicraft. AND WHEREAS at the request of the Borrower for assistance from NABARD towards “Name of the Channel Partner”, NABARD has sanctioned an amount of Rs. lakhs (Rupees Only) of which Rs. lakh (Rupees Only) is towards grant, Rs. lakh (Rupees Only) as soft loan and Rs. lakhs (Rupees Only) as Venture Like Assistance for (state the purpose) (hereinafter referred to as the “said assistance”), as mentioned in the Sanction Letter dated issued by NABARD in favour of the Borrower, on the terms and conditions set out therein. AND WHEREAS one of the conditions of the Sanction is that the Borrower shall hypothecate all assets created out of Venture Like Assistance, Working Capital Soft Loan and Grant sanctioned under Expenditure for NFS promotional schemes, raw material, stock-inprogress, finished goods. NOW, IN CONSIDERATION of NABARD being agreeing to sanction the advances for the purposes and subject to the terms and conditions specified and contained in various Deeds, Documents, Writings: (a) The Borrower hereby hypothecate with NABARD the property described in general terms herein and in details in the Schedule, hereinafter referred to as “hypothecated assets”, which expression shall mean and include all produce, goods, and other movable property of any kind including machinery, vehicle(s), its/their accessories, implements etc., belonging to the Borrower which now or hereafter from time to time during the continuance of this agreement shall be brought in, stored or be in or about their premises or godowns at or any other godown(s) as approved by NABARD or be in course of transit from one godown to another or from one place to another or wherever else ths same may be.
Sr.
PARAMETERS
No. 5
Max. Marks
Book keeping/ Accounts
5
Accounts are properly maintained and audited upto date, without serious observations
5
Accounts are maintained properly but audit in arrears for more than 2 years 6
2
Accounts not properly maintained/ not audited for long
0
Financial aspects
10
Past record showing ability to generate resources from a variety of sources to defray its operational expenses
5
Asset base of the Channel partner, ability to provide collateral 7
for loans, track record of servicing loans if any
5
Infrastructure of the agency
10
Agency has adequate infrastructure like land, own building, vehicle( if necessary), office infrastructure etc. for carrying out their activities smoothly
10
Agency has no land or building but works in a rented premises with adequate infrastructure support including office infrastructure,
8
vehicle ( if necessary ) for carrying out their activities smoothly
8
Agency works with some infrastructure
4
Infrastructure is grossly inadequate for the project
0
Monitoring arrangement
5
Agency has good arrangement for regular monitoring of the project
3
Agency had been regular/ has good system for submitting MIS 9
returns as required by the funding agency
2
Operational Sustainability of the agency
5
( marks may be awarded based on the perception of the officer regarding the standing of the agency and the possibility of its continuing its work for long without winding up in between. on a scale of 0 to 5 ) TOTAL
100
Qualifying marks - at least 60% i.e., 60 or more and should score at least 40% marks under each Parameter.
Appraisal Process Flow Chart
Annexure-II
Proposal Received from the Agency
Proposal more than Rs 5 .00 lakh
Proposal less than Rs 5 .00 lakh
Detail Project Report by Agency
Submitted to DDM/RO
DDM Reco mmendations
Proposal Scrutiny by RO
Proposal Sanction by PSC
Issue of Sanction Letter
Acceptance by Agency
Execution of loan/ Security Docume.
Release of Loan/ Grant
Monitoring
Repayment if any
Impact Evaluation
- Risk appraisal: Risk appraisal is a major aspect of any project as the risks of the projects could be reduced substantially by well thought out ‘risk mitigation strategies’. This also includes risks arising due to lack of experience of handling of funds on lending and recovery. - Working Capital Loans: These loan proposals would be appraised using operating cycle cash flow analysis to estimate the requirements; current ratio and quick ratio analysis would be used for examining the sufficiency of liquidity to service the loan. Credit Decisions The credit decisions involve application of findings from appraisals. When a decision to sanction a loan is made the other decisions such as quantum of loan, period of repayment, need for and extent of moratorium, type and extent of security, margin requirements, need for raising additional capital by project holders as als o the extent of accompanying grant (and the purpos es for which grant s hould be made available) also would be made. Security Assets created out of our financial assistance are Prime Security and would be charged to NABARD as Hypothecation of Assets. All current Assets representing Stock of Raw Materials and Purchases during the year of operation, Raw Materials in Process and Finished goods as also Sundry Debtors on account of Sales and/or immovable assets created out of NABARD finance (loan for construction of shed/building for grounding of machinery etc) are referred as ‘Primary security”. Personal guarantee of promoters may also be obtained. Along with Hypothecation and DP note, acceptance of general and special terms and conditions as per sanction letter may be provided by the Channel Partner. Risk Mitigation strategies - The risk mitigation strategies would vary from project to project. The assets created would be insured withthe General Insurance Company. - Group lending to SHGs/JLGs for NFS activities could be adopted to mitigate the risk. - Capacity building measures and hand holding support would ensure that the borrower /beneficiary is fully equipped to manage the activity which in turn would reduce the chances of failure. Prudential Norms Prudential norms as applicable from time to time as per loan policy of NABARD will be ipso-facto applicable. Monitoring Project will be monitored periodically by the DDM/RO. The periodicity will be once in a quarter to once in six months. Before releasing funds, monitoring visit would be conducted by DDM/RO and release recommended. The monitoring would cover the status; stage of implementation; corrective steps, if any, required; further funding requirements; areas where capacity building of stake holders are required; etc . Monitoring visits would be undertaken at different levels – Presanction, ongoing and Post implementation of project. Periodical Monitoring will be undertaken by DDM/RO.