WBMDFC

AIKYASHREE(STATE MINORITY SCHOLARSHIP SCHEME)

FAQ for Term Loan

Q. What is the Age limit of Term Loan beneficiary?
A. 18-50 years.In case of refinance loan, Maximum age limit of the beneficiary is 55 years.
Q. What is the rate of interest of Term Loan?
A. If annual family income of the applicant in rural areas is Rs. 98,000/- and in urban areas is Rs.1,20,000/-, then rate of interest of Term Loan is 6% p.a. irrespective of male and female beneficiary. But if annual family income of male beneficiary exceeds the above mentioned family income limit and within Rs 8 lac, then rate of interest will be 8% p.a. But rate of interest will remain same@ 6% p.a. in case of female beneficiary even though their annual family income exceeds the above limit.
In order to know the annual income of any beneficiary, it is necessary to obtain income certificate or IT return. It is our duty to see whether correct rate of interest has been applied or not.
Q. What is the objective of the Term Loan?
A. The objective of the Term loan Scheme is to provide loan to eligible minority youths in order to make themselves employed, improve their income and consequently enable them to create secondary employment and job opportunities for other youths also. Development of business and creation of secondary employment are desirable after availing Term Loan facility. Post disbursement inspection and supervision is very important.
Q. When guarantors to be taken?
A. a) For loan from Rs. 50,000/- to Rs.1 lakh : An applicant applying for a loan amount between Rs. Rs. 50,000/- to Rs.1 lakh will provide a surety who may be income tax payee or professionally qualified person(Doctor , Engineer, Advocate etc.)
b) For loan exceeding Rs.1 lakh: Those applying for loan exceeding Rs.1 lakh will have to provide a guarantor who may be government or semi government employee (e.g. a recognised govt. school teacher, govt bank employee etc.) or a good beneficiary who repaid the loan in due time, of WBMDFC.
Q. What is the amount of Term Loan?
A. a) generally, maximum Rs 5 lac loan is given as Term Loan
b) Rules for refinance loan:
Refinance loan above Rs. 2 lac: Previous loan to be paid in time and no dues certificate to be submitted along with refinance loan application. Refinance loan is not the right of the beneficiary. It is only under the consideration of WBMDFC.
Q. What is the meaning of Due diligence? Is it very important?
A. We have to see 4Cs of the beneficiary. These 4Cs are to be verified with 5 senses which is called Due diligence. It is very important in the case of selection of borrowers. If any mistake happens in case of selection of beneficiary, then there is risk of recovery.
These 4Cs are Character, Capital, Capacity and Collateral.
Character means what kind of person the beneficiary is. Whether his/her business transactions are normal in nature or not. Whether he/she is acceptable in the society or not. Whether his/her honesty is doubtful or not etc. Capital: Whether the proposed beneficiary is having his/her own long term or short term capital or not at the time of sanctioning the loan. It is also to be considered whether the proposed beneficiary will be able to bring any capital in future or not etc.
Capacity: Whether the proposed beneficiary is having any capacity to repay the loan or not. Capacity means his/her knowledge, education, experience etc.
Collateral: Collateral means additional. There are two types of security – One is prime security and another one is collateral security. The asset which is created out of term loan is called prime security. Personal guarantee is a collateral security. Our WBMDFC takes guarantor as collateral security.
Apart from the above, we have to see the demand of the product or marketability of the product if it is manufacturing unit.
Q. What is the meaning of End-use of fund? What is its importance?
A. End use of fund means the purpose for which loan was taken has been fulfilled or not. On the other hand the money which beneficiary got as a loan has been properly utilised for that purpose or not. Diversion of fund is not permitted under any circumstances by any financial institution. That is why post disbursement verification is very important in the banking sector. If it does not happen, asset will not be created and income will not be generated. As a result repayment will not take place. Moreover, hypothecation agreement will be meaningless. So it is the duty of Field Supervisor and Recovery Agent to verify whether the loan amount has been properly utilised in the business for which loan was taken.
Q. What is the Form number of trade licence? Who is the issuing authority?
A. Form No. 11[See rule 58(2) of the W.B. Panchayat Rules, 2004 as amended upto 2006]
Issuing authority:
In case of Gram panchayet –Anchal Pradhan.
In case of Municipality: Specific officer in the Trade licence department.
In case of Kolkata Municipal Corporation- Specific officer in the Trade licence department.
Q. What is the proof of Domicile? Is it necessary for beneficiary to be a permanent domicile of West Bengal?
A. Passport, citizenship certificate or name in voter list is the proof of citizenship. EPIC card holder but his name is not in the voter list does not prove that he is a citizen of India. Every FS should keep voter list in his TAB in the form of PDF file. Only Domicile in West Bengal can avail any facility of Govt of West Bengal. So beneficiary must be a permanent domicile of West Bengal.
Q. Aadhar Card/Ration Card/Driving license or PAN card – are these proof of citizenship?
A. No.
Q. What is CIBIL? What information can we get from it?
A. Full form of CIBIL is Credit Information Bureau of India Ltd. CIBIL is a Private financial company which follows the rules of RBI. From it we can know the credit history of any person. Generally credit score ranges from 300 to 900. If credit score of any person is 750 then he/she is suitable for any loan. If credit score is less than 650, then he/she is not suitable for any loan. For the following reasons, credit score may be less than optimum.
a) If any loan against credit card is not paid in the time, then credit score may be less.
b) If any bank loan is not paid according to the repayment schedule, then credit score may be less.
c) If any person does not pay instalments or interest or both within 90 days, then his/her loan will become NPA, Then its credit scores may be less.
d) If any person doesn’t pay consecutive 3 instalments then his loan becomes NPA. Hence his credit score may be less.
e) If inst alment of any loan is not Paid on due date then also credit score may be less.
f) If any NACH/Cheque is dishonoured for want of fund then his credit score may be less.
For that reason before granting any loan of Rs. 2 lacs or above to any person, bank or any financial institution examines his/her CIBIL.CIBIL report indicates whether the person has taken any loan from any financial institution or not. If he/she takes any loan then it indicates the status of the loan. CIBIL report can be obtained with the help of PAN number.
Q. Can any loan amount be credited in current account in the name of the applicant?
A. Yes.
Q. Can loan be credited in bank account in the name of company/ firm?
A. The name in the loan application and Bank passbook should remain the same. If a person applies for loan and he/she is having a bank account in the name of a shop, then sanctioned loan amount cannot be credited in the bank account in the name of the shop.
Q. Can loan be credited in bank account in the name of partnership firm?
A. No.
Q. What is under finance and over finance?
A. When loan amount is granted less than the optimum level of loan amount, and then it is called under finance. Similarly when loan amount is granted more than optimum level of loan amount then it is called over finance.
In case of small business,
Minimum working capital requirement = 25% of projected annual sales turn over, but margin money to taken in case of any business.
In this case the margin money = 5% projected annual sales turn over.
So minimum working capital finance = 20% of the projected annual sales turnover.
It is mandatory to sanction minimum working capital required. This amount is recommended as per NAYAK committee's recommended, which is formed under RBI.

If the loan sanctioned is less than minimum working capital requirement, it is called under finance.
If the loan sanctioned is more than the optimum level of working capital requirement, it is called over finance.
Under finance and over finance both are harmful. Due to under finance, business faces loss and it cannot be matured. Due to over finance, fund can be diverted. As a result repayment may suffer, therefore, both under finance and over finance are important to a lender. That is why lender has to give importance to both under finance and over finance at the time of granting any loan. So it is the duty of the lender WBMDFC, to sanction exact amount of finance to beneficiaries.
Q. Can loan amount be credited in cash credit account in the name of applicant?
A. No. because cash credit account itself is a loan account. If any loan is sanctioned to a cash credit account holder, then it is equivalent to double finance. Hence loan cannot be given to any cash credit account holder.
Q. Can loan amount be sanctioned to a defaulter?
A. No. If any borrower does not repay his/her loan he/she is called a defaulter. So loan cannot be given to any defaulter of any bank or financial institution. It is the duty of FS and RA to see into the matter so that no loan can be granted to any defaulter of any financial institution.
Q. If any cutting in documents is there at the time of filling, what will happen?
A. Any cutting in documents to be authenticated by the borrower by putting his signature besides the cutting mark.
Q. Whether whitener can be used in document?
A. No. Document cannot be accepted if whitener is used, because it is a tampered document. This is not enforceable in the code of law.
Q. Whether name and address of a witness is compulsory?
A. Yes. Full name of the witness with signature is to be obtained. Also full address is to be written in the Form.
Q. How many witnesses are required?
A. Two witnesses are required out of which it is better to take one FS as witness.
Q. Is document to be written in the same ink and in the same handwriting?
A. Yes. Documents should be filled up in the same ink and the same handwriting.
Q. Is it necessary to fill up every document?
A. Yes. Since it is a legal document & hence all columns are to be filled up compulsorily.
Q. Is photocopy of any photocopied document acceptable?
A. No. Photocopy is to be done on original document only. If we take photocopy of any photocopied document then there is a chance of fraud and forgery. In order to avoid this kind of incident photocopy of photocopied document is strictly prohibited.
Q. Is it necessary to write full address in enquiry Form?
A. Yes. It is very much essential to write full address in enquiry Form because any correspondence of Govt for any notice of the court can reach the actual address of the beneficiary smoothly. So it is the duty of FS and RA to write full address of beneficiary as well as guarantor in enquiry Form.
Q. During the period of loan whether a borrower can close his/her Bank A/c?strong>
A. No. It is an agreement between the borrower & lender. Without approval of lender the borrower can't close his/her A/c. If it happens so, it is a breach of trust which attracts IPC Sector.

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