Bihar Industrial Investment Finance Guidelines, 2019

Jan 22, 2019 | by Avantis RegTech Legal Research Team

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Commercial Compliance

The State Government of Bihar on January 17, 2019 has notified the guidelines for industrial finance to promote industrial investment in the State of Bihar.

Bihar is one of the fastest growing states in India. The scale and pace of economic change that Bihar has witnessed over past few years has been the result of a comprehensive, home-grown reform program initiated by the government. All these changes have provided an enabling environment for private investment in the state and greater industry commitment. For the industrialization of the state, availability of finance is an important factor. Department of Industries aims at creating industry-friendly financing environment for promoting industrial investment. The overall objective is to maximize the value addition to state's natural resources by supporting industries across the state, generating revenue and creating employment. The industrial finance activity will facilitate industrialization of the state, generate employment and add to its overall growth.

·         Following State Finance Organisations (SFOs) shall be designated for extending financial assistance to the industrial units:

a.       Bihar State Industrial Development Corporation (BSIDC);

b.      Bihar State Credit and Investment Corporation Limited (BICICO);

c.       Bihar State Financial Corporation (BSFC).

·         Following types of financial assistance shall be available:

a.       Equity financing to an industrial unit shall be done by the BSIDC only in terms of redeemable preference shares;

b.      Term loan financing to an industrial unit shall be done by the BSIDC and BICICO for the creation of fixed assets except land;

c.       Working capital financing (Short term lending) to an industrial unit shall be done by the BSFC.

·         The SFOs shall also do other kinds of financing like Housing Finance, Vehicle Finance etc. through suitably designed financial products based on their eligibility and market requirements.

·         Following types of industrial units (across the various industrial sectors listed in Schedule-I [Page 8]) shall be eligible for availing finance:

a.       New Industrial Units: New Industrial Unit means an industrial unit, in which commercial production has commenced after the commencement of this Guideline;

b.      Existing Industrial Units: Existing Industrial Unit means an industrial unit which has started its commercial production before commencement of this Guideline;

c.       Sick Industrial Units: Sick Industrial Unit means a MSME declared sick by the National Company Law Tribunal (NCLT) or by the State Level Committee for Rehabilitation of Micro, Small and Medium Enterprises headed by the Director of Industries, Bihar, Patna.

·         The jurisdiction of the abovementioned organisation for extending industrial finance shall be the whole of Bihar. Any industrial unit located in Bihar shall be considered for financing under the Guideline.

·         APEX COMMITTEE:

o   The State Level Committee (Apex Committee) for the Rehabilitation of Micro, Small and Medium category sick units constituted under the Chairmanship of the Director of Industries, Patna, Bihar shall be responsible for the implementation and monitoring of these guidelines.

o   The Apex Committee shall be responsible for the receipt of application, their appraisal and sanction of financial assistance to an industrial unit.

o   The Apex Committee can hire experts/ Programme Management Agency/ avail the services of banks and/or NBFCs approved by RBI to appraise the proposals received for financing.

·         DISBURSEMENT OF APPROVED FINANCIAL ASSISTANCE:

o   Disbursement of approved financial assistance and post-disbursal control, supervision and monitoring shall be done by the respective SFOs.

o   Both primary and collateral securities shall be obtained against the financial assistance extended to the units by the SFOs. This shall be maximum up to 200% of the loan amount, including 100% of the primary security. The percentage of Collateral Security shall depend on the location and nature of the industry and nature of loan.

o   Following assets shall be considered preferable as collateral security:

                                 i.            Non-encumbered vacant land;

                               ii.            Building/ House/ Apartments;

                              iii.            Fixed Deposits;

                             iv.            KVP, NSC, LIC policies etc.

Wherever applicable, value of the security should be certified by an approved/ empanelled valuer. Further, ornaments, etc., shall not be accepted as collateral security.

o   The maximum limit for any type of financial assistance given to a unit shall be Rs. 2 Crore.

o   BSIDC will invest only in companies limited by shares in form of Redeemable Preference Shares up to 25% of the paid-up share capital of the company, or Rs. 2 Crore, whichever is less.

·         The Apex Committee shall also monitor the progress of disbursement of approved financial assistance and repayment schedule made under this guideline and issue necessary direction to SFOs.

·         Following list of units shall be considered as the negative list of units and shall not be eligible for any support under this Guideline:

a)      Units manufacturing narcotic drugs;

b)      Units manufacturing alcoholic beverages;

c)       Tobacco based industries;

d)      Units manufacturing asbestos.

·         All matters of interpretation/disputes shall be decided by the Industrial Development Commissioner/ Principal Secretary, Department of Industries, after consultation with the Law Department. Such interpretation/decision shall be final and binding for all concerned parties.

The Guideline will come into effect from the date of issue of the Resolution.

[Resolution No. SIPB/Misc. (IF)-33/2018- 371/]

URL: http://egazette.bih.nic.in/GazettePublished/66_2_2019.pdf#page=1


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