Syndicate Bank considers the micro, small and medium enterprises (MSMEs) of the country as very important customers. It is committed to helping the MSMEs with easy, speedy and transparent access to banking services, not only for their day-to-day requirements but also during their periods of financial difficulty. The bank has dedicated MSME Care Centres in different parts of India, to help these businesses in getting faster and better access to its services.
Syndicate Bank offers a number of loan products to its MSME customers (http://www.syndicatebank.in/scripts/SyndMSMECare.aspx). The major ones among these schemes are outlined below.
One-time Settlement (OTS) Scheme for NPAs
The bank offers a one-time settlement of the non-performing assets (NPAs) of MSMEs which have already taken a loan of not more than Rs 50 lakh. This does not include cases of wilful default and fraud.
The amount of settlement to be provided to these MSMEs is decided upon by the bank, 10 per cent of which is paid up front. The balance is usually paid in a lump sum, along with the interest accrued on it, within a period of three months to a year.
All kinds of MSMEs can avail of loans under this scheme, to meet their finance requirements. There is no maximum limit for the loans available under the scheme.
For loans of below Rs 10 lakh provided under this scheme, the bank does not require any collateral. The mortgage of land and building associated with the business can be offered as primary security. The same is the case with loans between Rs 10 lakh and Rs 100 lakh, for MSMEs eligible to be covered under the Credit Guarantee Fund Trust For Micro And Small Enterprises (CGTSME).
In case of loans above Rs. 10 lakh not covered by CGTSME and for loans above Rs 100 lakh, the MSME needs to hypothecate plant and machinery, stock, equipment, vehicles or book debts of 110 per cent of the loan with the bank. In addition, collateral security would also have to be offered, according to the requirements of the bank.
SyndVyapar aims to meet the credit requirements of all kinds of traders, including self-employed people, retailers and professionals. The maximum amount of loan offered under this scheme is Rs 200 lakh.
Stock and book debts can be hypothecated with the bank as security.
Prime Minister’s Employment Generation Programme (PMEGP)
This scheme offers finance to entrepreneurs who wish to establish their own business units, with the aim of creating employment opportunities in rural as well as urban areas. The scheme merges the Prime Minister’s Rojgar Yojna (PMRY) and Rural Employment Generation Programme (REGP).
Finance is available not only to individuals, but also to registered societies, charitable trusts and self-help groups. However, funds will be provided only to new units, which have not already received subsidy under any other scheme.
The maximum amount of loan available under this scheme is Rs 25 lakh for manufacturing units, and Rs 10 lakh for service units, including capital expenditure and one cycle of working capital.
No collateral security or third-party guarantee are required under this scheme. However, the assets created using the loan need to be hypothecated with the bank as primary security.