Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.1 These guidelines have been framed with a view to provide additional 1.1 These guidelines have been framed with a view to provide No change
avenue for recovery for the purpose of recycling the funds of Non- additional avenue for recovery for the purpose of recycling the
Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.2 The compromise should be a negotiated settlement under which THE 1.2 The compromise should be a negotiated settlement under which
LENDER should ensure to recover its dues to the maximum extent THE LENDER should ensure to recover its dues to the maximum No change
possible at minimum sacrifice by taking into consideration the facts and extent possible at minimum sacrifice by taking into consideration
circumstances of each case. the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

1
 Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.1 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.1 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

4. Re-payment 4.1 Foregoing of lawyers fees and other legal, incidental charges. 4.1 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.2 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.3 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.5 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.5 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.6 Post Dated Cheques may be obtained for the balance payment and interest,
if any. 4.6 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.7 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.7 In case of consortium/co-financing of projects, sharing security on pari- For more clarity.
the terms & conditions of the lead institutions may be followed by THE passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.1 In case of defaults on not adhering to installment deadlines penal interest @ 5.1 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is

2
 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.2 Right of forfeiture in case of persistent defaults despite fixation of 5.2 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.1 A Compromise Deed should be documented as per the advice of Legal 6.1 A Compromise Deed shall be documented as per the advice of Legal No change
Department for suit filed cases. Department for suit filed cases.
Documentation

6.2 The Legal Department should ensure that all documents/ securities are in 6.2 The Legal Department/F&A shall ensure that all documents/ securities For more clarity.
force till the entire settlement dues are recovered. are in force till the entire settlement dues are recovered unless
agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

3
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

1) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
2) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

4
 the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower. No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member

5
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.1 The borrower should come forward with a detailed settlement proposal 10.1 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.2 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.2 The concerned dealing official from Technical Department shall

10.3 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.4 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.5 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.3 The proposal should be examined in details by the Settlement
Advisory Committee.
10.6 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.4 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.7 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.5 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

6
 10.6 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.7 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.3 These guidelines have been framed with a view to provide additional 1.3 These guidelines have been framed with a view to provide No change
avenue for recovery for the purpose of recycling the funds of Non- additional avenue for recovery for the purpose of recycling the
Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.4 The compromise should be a negotiated settlement under which THE 1.4 The compromise should be a negotiated settlement under which
LENDER should ensure to recover its dues to the maximum extent THE LENDER should ensure to recover its dues to the maximum No change
possible at minimum sacrifice by taking into consideration the facts and extent possible at minimum sacrifice by taking into consideration
circumstances of each case. the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower

7
 or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.2 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.2 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

4. Re-payment 4.4 Foregoing of lawyers fees and other legal, incidental charges. 4.2 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.5 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.6 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

8
 4.8 As far as possible proposal should provide for recovery of compromise
4.8 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.9 Post Dated Cheques may be obtained for the balance payment and interest,
4.9 Post Dated Cheques may be obtained for the balance payment and
if any. No change
interest, if any.

4.10 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.10 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.3 In case of defaults on not adhering to installment deadlines penal interest @ 5.3 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.4 Right of forfeiture in case of persistent defaults despite fixation of 5.4 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.3 A Compromise Deed should be documented as per the advice of Legal 6.3 A Compromise Deed shall be documented as per the advice of Legal No change
Department for suit filed cases. Department for suit filed cases.
Documentation

6.4 The Legal Department should ensure that all documents/ securities are in 6.4 The Legal Department/F&A shall ensure that all documents/ securities For more clarity.
force till the entire settlement dues are recovered. are in force till the entire settlement dues are recovered unless
agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

9
  The inspection of the secured assets shall be carried out before
submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

3) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
4) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

10
  The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
No change
valuer is lower than the loan outstanding/security not created. years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower.
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/

11
 third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.8 The borrower should come forward with a detailed settlement proposal 10.8 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.9 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

12
 10.9 The concerned dealing official from Technical Department shall
10.10 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note No change
(covering proposal of the borrower, eligibility as per THE
10.11 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.12 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.10 The proposal should be examined in details by the Settlement
10.13 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.11 Recommendations of the Settlement Advisory Committee shall be
10.14 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.12 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.13 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.14 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.5 These guidelines have been framed with a view to provide additional 1.5 These guidelines have been framed with a view to provide No change
avenue for recovery for the purpose of recycling the funds of Non- additional avenue for recovery for the purpose of recycling the
Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.6 The compromise should be a negotiated settlement under which THE 1.6 The compromise should be a negotiated settlement under which
LENDER should ensure to recover its dues to the maximum extent THE LENDER should ensure to recover its dues to the maximum No change
possible at minimum sacrifice by taking into consideration the facts and extent possible at minimum sacrifice by taking into consideration
circumstances of each case. the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change

13
 And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.3 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.3 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

4. Re-payment 4.7 Foregoing of lawyers fees and other legal, incidental charges. 4.3 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.8 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.9 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

14
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

-do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing
-do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.11 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.11 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon
No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.12 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.12 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.13 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.13 In case of consortium/co-financing of projects, sharing security on
For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.5 In case of defaults on not adhering to installment deadlines penal interest @ 5.5 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.6 Right of forfeiture in case of persistent defaults despite fixation of 5.6 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.5 A Compromise Deed should be documented as per the advice of Legal 6.5 A Compromise Deed shall be documented as per the advice of Legal No change
Department for suit filed cases. Department for suit filed cases.
Documentation

6.6 The Legal Department should ensure that all documents/ securities are in 6.6 The Legal Department/F&A shall ensure that all documents/ securities For more clarity.
force till the entire settlement dues are recovered. are in force till the entire settlement dues are recovered unless
agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/

15
 guarantors. 7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more 7.4 Valuation of assets:-
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT
important criteria for deciding the
approved Govt. Valuer.
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

5) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
6) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

16
  Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.

100% of the principal  Action initiated under SARFAESI Act and is pending for more
than 1 year.

B : Settlement amount : Amount below principal : 100% of the Principal outstanding.

1) For NPAs over 5 years as on the cut off date and, if any two of the following B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years following condition prevail:

 Suits pending for more than 5 years  Unit lying closed for more than 5years

 Suits pending for more than 5 years

 The company has never achieved cash break even

 The company has remained unimplemented for more than 3 years  The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent years No change
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created. No change
already provided for/ written off in the books of THE LENDER)
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)

C : Settlement amount : 100% Principal + Simple Interest : Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
1) For NPAs over 3 years and less than 5 years as on the cut off date- the personal/corporate guarantors after deductible liabilities.
No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever C : Settlement amount : 100% Principal + Simple Interest :
is lower.
1) For NPAs over 3 years and less than 5 years.

100% of the Principal+ Simple Interest from the NPA Date at

2) For NPAs over 2 years but less than 3years as on the cut off date- applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
100% of the Principal+ Simple Interest covered in the gross profit earned during No change
the period of default or Simple Interest at present lending rate, whichever is
2) For NPAs over 2 years but less than 3years as on the cut off date-
lower.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
3) Cases likely to become NPA at the end of the relevant previous year/ projects average rate of disbursement) whichever is lower.
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower- 3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
100% of the Principal+ Simple Interest at document rate or at present lending to the reasons beyond the control of the borrower-
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
D : Settlement amount for specific Sectors : applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

17
 1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower. Settlement amount may be arrived at as follows:-

 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.15 The borrower should come forward with a detailed settlement proposal 10.15 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,

18
 if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.16 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.16 The concerned dealing official from Technical Department shall

10.17 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.18 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.19 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.17 The proposal should be examined in details by the Settlement
10.20 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.18 Recommendations of the Settlement Advisory Committee shall be
10.21 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.19 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.20 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.21 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

19
S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification
o.
1. Aim/Objectives 1.7 These guidelines have been framed with a view to provide additional 1.7 These guidelines have been framed with a view to provide No change
avenue for recovery for the purpose of recycling the funds of Non- additional avenue for recovery for the purpose of recycling the
Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.8 The compromise should be a negotiated settlement under which THE 1.8 The compromise should be a negotiated settlement under which
LENDER should ensure to recover its dues to the maximum extent THE LENDER should ensure to recover its dues to the maximum No change
possible at minimum sacrifice by taking into consideration the facts and extent possible at minimum sacrifice by taking into consideration
circumstances of each case. the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.4 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this

20
 may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.4 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

4. Re-payment 4.10 Foregoing of lawyers fees and other legal, incidental charges. 4.4 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.11 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.12 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.14 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.14 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.15 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.15 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.16 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.16 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.7 In case of defaults on not adhering to installment deadlines penal interest @ 5.7 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.8 Right of forfeiture in case of persistent defaults despite fixation of 5.8 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

21
6. Legal 6.7 A Compromise Deed should be documented as per the advice of Legal 6.7 A Compromise Deed shall be documented as per the advice of Legal No change
Department for suit filed cases. Department for suit filed cases.
Documentation

6.8 The Legal Department should ensure that all documents/ securities are in 6.8 The Legal Department/F&A shall ensure that all documents/ securities For more clarity.
force till the entire settlement dues are recovered. are in force till the entire settlement dues are recovered unless
agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

7) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&

22
 Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
8) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
No change
valuer is lower than the loan outstanding/security not created. years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

23
 2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors

24
 Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.22 The borrower should come forward with a detailed settlement proposal 10.22 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.23 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.23 The concerned dealing official from Technical Department shall

10.24 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.25 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.26 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.24 The proposal should be examined in details by the Settlement
Advisory Committee.
10.27 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.25 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.28 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.26 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.27 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.28 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific

25
 these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.9 These guidelines have been framed with a view to provide additional 1.9 These guidelines have been framed with a view to provide No change
avenue for recovery for the purpose of recycling the funds of Non- additional avenue for recovery for the purpose of recycling the
Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.10 The compromise should be a negotiated settlement under which 1.10 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are

26
 not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.5 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.5 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

4. Re-payment 4.13 Foregoing of lawyers fees and other legal, incidental charges. 4.5 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.14 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.15 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.17 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.17 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

27
 4.18 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.18 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
No change

4.19 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.19 In case of consortium/co-financing of projects, sharing security on
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
LENDER also. followed.

5. Other issues 5.9 In case of defaults on not adhering to installment deadlines penal interest @ 5.9 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.10 Right of forfeiture in case of persistent defaults despite fixation of 5.10 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.9 A Compromise Deed should be documented as per the advice of Legal 6.9 A Compromise Deed shall be documented as per the advice of Legal No change
Department for suit filed cases. Department for suit filed cases.
Documentation

6.10 The Legal Department should ensure that all documents/ securities are 6.10 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

28
  Value of securities (saleable/realizable value of physical
assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

9) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
10) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent No change
years
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan

29
 outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created.
already provided for/ written off in the books of THE LENDER) No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest : Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
1) For NPAs over 3 years and less than 5 years as on the cut off date- the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any No change
during the period of default or Simple Interest at present lending rate whichever C : Settlement amount : 100% Principal + Simple Interest :
is lower.
1) For NPAs over 3 years and less than 5 years.

100% of the Principal+ Simple Interest from the NPA Date at

2) For NPAs over 2 years but less than 3years as on the cut off date- applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is No change
lower. 2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

applicable present lending rate or document rate (weighted
3) Cases likely to become NPA at the end of the relevant previous year/ projects average rate of disbursement) whichever is lower.
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower- 3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
100% of the Principal+ Simple Interest at document rate or at present lending to the reasons beyond the control of the borrower-
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
D : Settlement amount for specific Sectors : applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower.
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

30
 Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.29 The borrower should come forward with a detailed settlement proposal 10.29 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.30 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.30 The concerned dealing official from Technical Department shall

10.31 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE

31
 10.32 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.33 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.31 The proposal should be examined in details by the Settlement
10.34 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.32 Recommendations of the Settlement Advisory Committee shall be
10.35 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.33 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.34 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.35 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.11 These guidelines have been framed with a view to provide 1.11 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.12 The compromise should be a negotiated settlement under which 1.12 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower.

32
 beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to remote.
No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent opportunity cost of delay in early recovery shall also have to be
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the considered For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.6 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.6 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

4. Re-payment 4.16 Foregoing of lawyers fees and other legal, incidental charges. 4.6 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.17 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.18 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

33
  Simple interest @ prevailing sector rate on reducing
 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days. -do-
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and
lower plus 1%.
upto the date of entire payment.
-do-
Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days
from the date of dispatch of the sanction letter).
No change

4.20 As far as possible proposal should provide for recovery of compromise

4.20 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above No change

4.21 Post Dated Cheques may be obtained for the balance payment and
4.21 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any.
No change
4.22 In case where One Time Settlement is considered based on the One Time
4.22 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis,
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed. For more clarity.
LENDER also.

5. Other issues 5.11 In case of defaults on not adhering to installment deadlines penal 5.11 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.12 Right of forfeiture in case of persistent defaults despite fixation of 5.12 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.11 A Compromise Deed should be documented as per the advice of Legal 6.11 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.12 The Legal Department should ensure that all documents/ securities are 6.12 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The

34
 borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

11) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
12) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.

35
B : Settlement amount : Amount below principal : 100% of the Principal outstanding.

1) For NPAs over 5 years as on the cut off date and, if any two of the following B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years following condition prevail:

 Suits pending for more than 5 years  Unit lying closed for more than 5years

 Suits pending for more than 5 years

 The company has never achieved cash break even

 The company has remained unimplemented for more than 3 years  The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent years No change
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created.
No change
already provided for/ written off in the books of THE LENDER)
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)

C : Settlement amount : 100% Principal + Simple Interest : Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
1) For NPAs over 3 years and less than 5 years as on the cut off date- the personal/corporate guarantors after deductible liabilities.
No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever C : Settlement amount : 100% Principal + Simple Interest :
is lower.
1) For NPAs over 3 years and less than 5 years.

100% of the Principal+ Simple Interest from the NPA Date at

2) For NPAs over 2 years but less than 3years as on the cut off date- applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
100% of the Principal+ Simple Interest covered in the gross profit earned during No change
the period of default or Simple Interest at present lending rate, whichever is
lower. 2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

applicable present lending rate or document rate (weighted
3) Cases likely to become NPA at the end of the relevant previous year/ projects average rate of disbursement) whichever is lower.
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower- 3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
100% of the Principal+ Simple Interest at document rate or at present lending to the reasons beyond the control of the borrower-
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
D : Settlement amount for specific Sectors : applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower.
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the

36
  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.36 The borrower should come forward with a detailed settlement proposal 10.36 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since

37
 commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.37 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.37 The concerned dealing official from Technical Department shall

10.38 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE No change
10.39 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.40 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.38 The proposal should be examined in details by the Settlement
10.41 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.39 Recommendations of the Settlement Advisory Committee shall be
10.42 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.40 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy. No change

10.41 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.42 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.13 These guidelines have been framed with a view to provide 1.13 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.14 The compromise should be a negotiated settlement under which 1.14 The compromise should be a negotiated settlement under
No change

38
 THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.7 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.7 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

39
4. Re-payment 4.19 Foregoing of lawyers fees and other legal, incidental charges. 4.7 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.20 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.21 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.23 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.23 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.24 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.24 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.25 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.25 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.13 In case of defaults on not adhering to installment deadlines penal 5.13 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.14 Right of forfeiture in case of persistent defaults despite fixation of 5.14 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.13 A Compromise Deed should be documented as per the advice of Legal 6.13 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.14 The Legal Department should ensure that all documents/ securities are 6.14 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

40
7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

13) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
14) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

41
  Suits pending for the last 3 years.
 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
valuer is lower than the loan outstanding/security not created. years No change

No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any No change
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.

42
 beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.43 The borrower should come forward with a detailed settlement proposal 10.43 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

43
 Alongwith application, the borrower shall provide the following
documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.44 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.44 The concerned dealing official from Technical Department shall

10.45 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.46 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.47 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.45 The proposal should be examined in details by the Settlement
Advisory Committee.
10.48 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.46 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.49 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.47 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.48 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.49 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

44
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.15 These guidelines have been framed with a view to provide 1.15 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.16 The compromise should be a negotiated settlement under which 1.16 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the

45
 One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.8 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.8 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

4. Re-payment 4.22 Foregoing of lawyers fees and other legal, incidental charges. 4.8 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.23 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.24 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.26 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.26 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.27 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.27 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.28 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.28 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

46
5. Other issues 5.15 In case of defaults on not adhering to installment deadlines penal 5.15 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.16 Right of forfeiture in case of persistent defaults despite fixation of 5.16 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.15 A Compromise Deed should be documented as per the advice of Legal 6.15 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.16 The Legal Department should ensure that all documents/ securities are 6.16 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.

47
  Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

15) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
16) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if No change
 Unit lying closed for the last 3years. any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :

48
 Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower. No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.

 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting

49
 Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.50 The borrower should come forward with a detailed settlement proposal 10.50 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.51 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.51 The concerned dealing official from Technical Department shall

10.52 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.53 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.54 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.52 The proposal should be examined in details by the Settlement
Advisory Committee.
10.55 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.53 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.56 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change

50
 10.54 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.55 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.56 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.17 These guidelines have been framed with a view to provide 1.17 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.18 The compromise should be a negotiated settlement under which 1.18 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time

51
 or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
considered
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.9 A cut off date for the purposes of compromise should be ascertained. This A cut off date for the purposes of compromise should be ascertained. this
may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.9 Cut-off Date for the purpose of OTS shall be the date on which To simplify the calculation of
account is identified as Non-performing Assets (NPA) in the quantum of OTS amount.
books of accounts as on the balance sheet date i.e. presently
31st March.

4. Re-payment 4.25 Foregoing of lawyers fees and other legal, incidental charges. 4.9 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.26 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.27 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory

52
 within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.29 As far as possible proposal should provide for recovery of compromise

4.29 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.30 Post Dated Cheques may be obtained for the balance payment and
4.30 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.31 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.31 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.17 In case of defaults on not adhering to installment deadlines penal 5.17 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.18 Right of forfeiture in case of persistent defaults despite fixation of 5.18 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.17 A Compromise Deed should be documented as per the advice of Legal 6.17 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.18 The Legal Department should ensure that all documents/ securities are 6.18 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

53
  The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

17) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
18) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

54
  The company has remained unimplemented for more than 3 years
 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
valuer is lower than the loan outstanding/security not created. years No change

No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any No change
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

55
 2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.57 The borrower should come forward with a detailed settlement proposal 10.57 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.

56
 10.58 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.58 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.59 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.60 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.61 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.59 The proposal should be examined in details by the Settlement
Advisory Committee.
10.62 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.60 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.63 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.61 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.62 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.63 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.19 These guidelines have been framed with a view to provide 1.19 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.20 The compromise should be a negotiated settlement under which 1.20 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)

57
 No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.10 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.10 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.28 Foregoing of lawyers fees and other legal, incidental charges. 4.10 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.29 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.30 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

58
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

sanction letter (excluding three days from the date of -do-
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS -do-
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and
lower plus 1%.
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.32 As far as possible proposal should provide for recovery of compromise

4.32 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.33 Post Dated Cheques may be obtained for the balance payment and
4.33 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.34 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.34 In case of consortium/co-financing of projects, sharing security on
pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
the terms & conditions of the lead institutions may be followed by THE
LENDER also. followed.

5. Other issues 5.19 In case of defaults on not adhering to installment deadlines penal 5.19 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.20 Right of forfeiture in case of persistent defaults despite fixation of 5.20 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.19 A Compromise Deed should be documented as per the advice of Legal 6.19 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.20 The Legal Department should ensure that all documents/ securities are 6.20 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

59
 7.3 Value of the security available including net worth of the borrowers/
guarantors.
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
7.4 Valuation of assets:-

 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

19) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
20) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change

60
  Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
valuer is lower than the loan outstanding/security not created. years No change

No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any No change
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.

61
 demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.64 The borrower should come forward with a detailed settlement proposal 10.64 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at

62
 the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.65 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.65 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.66 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.67 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.68 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.66 The proposal should be examined in details by the Settlement
Advisory Committee.
10.69 Details of One Time Settlement approved by MD shall be submitted to
10.67 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.70 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.68 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.69 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.70 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

63
S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification
o.
1. Aim/Objectives 1.21 These guidelines have been framed with a view to provide 1.21 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.22 The compromise should be a negotiated settlement under which 1.22 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

64
3. Cut-off-Date 3.11 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.11 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.31 Foregoing of lawyers fees and other legal, incidental charges. 4.11 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.32 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.33 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.35 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.35 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.36 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.36 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.37 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.37 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.21 In case of defaults on not adhering to installment deadlines penal 5.21 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.22 Right of forfeiture in case of persistent defaults despite fixation of 5.22 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

65
6. Legal 6.21 A Compromise Deed should be documented as per the advice of Legal 6.21 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.22 The Legal Department should ensure that all documents/ securities are 6.22 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

21) For NPAs over 5years as on the cut- off date

66
 & A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
22) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

67
 2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors

68
 Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.71 The borrower should come forward with a detailed settlement proposal 10.71 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.72 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.72 The concerned dealing official from Technical Department shall

10.73 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.74 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.75 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.73 The proposal should be examined in details by the Settlement
Advisory Committee.
10.76 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.74 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.77 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.75 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.76 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.77 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.

69
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.23 These guidelines have been framed with a view to provide 1.23 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.24 The compromise should be a negotiated settlement under which 1.24 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the

70
 borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be For more clarity .
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent opportunity cost of delay in early recovery shall also have to be
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the considered
One Time Settlement proposal. For more clarity.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.12 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.12 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.34 Foregoing of lawyers fees and other legal, incidental charges. 4.12 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.35 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.36 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.38 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.38 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change

71
 in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.39 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.39 Post Dated Cheques may be obtained for the balance payment and
No change
interest, if any.

4.40 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.40 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.23 In case of defaults on not adhering to installment deadlines penal 5.23 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.24 Right of forfeiture in case of persistent defaults despite fixation of 5.24 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.23 A Compromise Deed should be documented as per the advice of Legal 6.23 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.24 The Legal Department should ensure that all documents/ securities are 6.24 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement
72
could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

23) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
24) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent No change
years
valuer is lower than the loan outstanding/security not created.
No change

73
  Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any No change
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

74
 Total dues as on NPA date.
Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.78 The borrower should come forward with a detailed settlement proposal 10.78 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.79 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.79 The concerned dealing official from Technical Department shall

10.80 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change

75
 Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.81 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.82 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.80 The proposal should be examined in details by the Settlement
10.83 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.81 Recommendations of the Settlement Advisory Committee shall be
10.84 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.82 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.83 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.84 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.25 These guidelines have been framed with a view to provide 1.25 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.26 The compromise should be a negotiated settlement under which 1.26 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which

76
 are delayed/ projects abandoned due to the reasons beyond the control of the securities are insufficient to cover the out standings and projects under
borrower. implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to remote.
No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent opportunity cost of delay in early recovery shall also have to be
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the considered For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.13 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.13 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.37 Foregoing of lawyers fees and other legal, incidental charges. 4.13 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.38 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.39 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-

77
 sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing -do-

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and -do-
lower plus 1%.
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.41 As far as possible proposal should provide for recovery of compromise

4.41 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.42 Post Dated Cheques may be obtained for the balance payment and
4.42 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.43 In case where One Time Settlement is considered based on the One Time
4.43 In case of consortium/co-financing of projects, sharing security on For more clarity.
Settlement of other financial institutions sharing security on pari-pasu basis,
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed.
LENDER also.

5. Other issues 5.25 In case of defaults on not adhering to installment deadlines penal 5.25 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.26 Right of forfeiture in case of persistent defaults despite fixation of 5.26 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.25 A Compromise Deed should be documented as per the advice of Legal 6.25 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.26 The Legal Department should ensure that all documents/ securities are 6.26 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

78
 7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.  Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT
Valuation of assets is an
approved Govt. Valuer.
important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

25) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
26) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more

79
 than 1 year.

B : Settlement amount : Amount below principal : 100% of the Principal outstanding.

1) For NPAs over 5 years as on the cut off date and, if any two of the following B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years following condition prevail:

 Unit lying closed for more than 5years

 Suits pending for more than 5 years
 Suits pending for more than 5 years
 The company has never achieved cash break even

 The company has remained unimplemented for more than 3 years  The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent years No change
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created.
No change
already provided for/ written off in the books of THE LENDER)
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)

C : Settlement amount : 100% Principal + Simple Interest : Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
1) For NPAs over 3 years and less than 5 years as on the cut off date- the personal/corporate guarantors after deductible liabilities.
No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever C : Settlement amount : 100% Principal + Simple Interest :
is lower.
1) For NPAs over 3 years and less than 5 years.

100% of the Principal+ Simple Interest from the NPA Date at

2) For NPAs over 2 years but less than 3years as on the cut off date- applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
100% of the Principal+ Simple Interest covered in the gross profit earned during No change
the period of default or Simple Interest at present lending rate, whichever is 2) For NPAs over 2 years but less than 3years as on the cut off date-
lower.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
3) Cases likely to become NPA at the end of the relevant previous year/ projects average rate of disbursement) whichever is lower.
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower- 3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
100% of the Principal+ Simple Interest at document rate or at present lending to the reasons beyond the control of the borrower-
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
D : Settlement amount for specific Sectors : applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
D : Settlement amount for specific Sectors :
demonstration category, the Settlement amount may be arrived that as follows:-

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower. Settlement amount may be arrived at as follows:-

80
  For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.85 The borrower should come forward with a detailed settlement proposal 10.85 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a

81
 certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.86 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.86 The concerned dealing official from Technical Department shall

10.87 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.88 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.89 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.87 The proposal should be examined in details by the Settlement
10.90 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.88 Recommendations of the Settlement Advisory Committee shall be
10.91 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.89 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.90 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.91 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.27 These guidelines have been framed with a view to provide 1.27 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the

82
 Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.28 The compromise should be a negotiated settlement under which 1.28 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.14 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.14 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of

83
 which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.40 Foregoing of lawyers fees and other legal, incidental charges. 4.14 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.41 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.42 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.44 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.44 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.45 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.45 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.46 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.46 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.27 In case of defaults on not adhering to installment deadlines penal 5.27 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.28 Right of forfeiture in case of persistent defaults despite fixation of 5.28 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.27 A Compromise Deed should be documented as per the advice of Legal 6.27 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.28 The Legal Department should ensure that all documents/ securities are 6.28 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered

84
 unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

27) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
28) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail

85
 No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
No change
valuer is lower than the loan outstanding/security not created. years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

86
 100% of the Principal+ Simple Interest from the NPA Date at
3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
 For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

87
10. Procedure 10.92 The borrower should come forward with a detailed settlement proposal 10.92 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.93 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.93 The concerned dealing official from Technical Department shall

10.94 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.95 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.96 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.94 The proposal should be examined in details by the Settlement
Advisory Committee.
10.97 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.95 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.98 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.96 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.97 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.98 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

88
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.29 These guidelines have been framed with a view to provide 1.29 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.30 The compromise should be a negotiated settlement under which 1.30 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred

89
 for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the For more clarity.
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.15 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.15 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.43 Foregoing of lawyers fees and other legal, incidental charges. 4.15 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.44 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.45 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.47 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.47 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.48 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.48 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.49 In case where One Time Settlement is considered based on the One Time

90
 Settlement of other financial institutions sharing security on pari-pasu basis, 4.49 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.29 In case of defaults on not adhering to installment deadlines penal 5.29 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.30 Right of forfeiture in case of persistent defaults despite fixation of 5.30 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.29 A Compromise Deed should be documented as per the advice of Legal 6.29 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.30 The Legal Department should ensure that all documents/ securities are 6.30 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.

91
  Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

29) For NPAs over 5years as on the cut- off date A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal &
Where the financial position of the company has not improved
subsequently-100% of the Principal
30) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 Suits pending for the last 3 years.

 The company has never achieved cash break even

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.

B : Settlement amount : Amount below principal : 100% of the Principal outstanding.

1) For NPAs over 5 years as on the cut off date and, if any two of the following B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years following condition prevail:
 Suits pending for more than 5 years  Unit lying closed for more than 5years

 Suits pending for more than 5 years

 The company has never achieved cash break even

 The company has remained unimplemented for more than 3 years  The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent years No change
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created.
already provided for/ written off in the books of THE LENDER) No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change

92
 Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)

C : Settlement amount : 100% Principal + Simple Interest : Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
1) For NPAs over 3 years and less than 5 years as on the cut off date- the personal/corporate guarantors after deductible liabilities.
No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever C : Settlement amount : 100% Principal + Simple Interest :
is lower.
1) For NPAs over 3 years and less than 5 years.

100% of the Principal+ Simple Interest from the NPA Date at

2) For NPAs over 2 years but less than 3years as on the cut off date- applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
100% of the Principal+ Simple Interest covered in the gross profit earned during No change
the period of default or Simple Interest at present lending rate, whichever is
2) For NPAs over 2 years but less than 3years as on the cut off date-
lower.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
3) Cases likely to become NPA at the end of the relevant previous year/ projects average rate of disbursement) whichever is lower.
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower- 3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
100% of the Principal+ Simple Interest at document rate or at present lending to the reasons beyond the control of the borrower-
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
D : Settlement amount for specific Sectors : applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
D : Settlement amount for specific Sectors :
demonstration category, the Settlement amount may be arrived that as follows:-

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower. Settlement amount may be arrived at as follows:-

 For NPAs between 2-5 years old-100% of the Principal.

Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up

93
 to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.99 The borrower should come forward with a detailed settlement proposal 10.99 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.100 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.100 The concerned dealing official from Technical Department shall

10.101 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.102 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.103 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.101 The proposal should be examined in details by the Settlement
Advisory Committee.
10.104 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.102 Recommendations of the Settlement Advisory Committee shall be

94
 placed before MD CMD for consideration and approval.
10.105 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.103 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.104 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.105 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.31 These guidelines have been framed with a view to provide 1.31 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.32 The compromise should be a negotiated settlement under which 1.32 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or

95
 (f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.16 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.16 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.46 Foregoing of lawyers fees and other legal, incidental charges. 4.16 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.47 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.48 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

96
 Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.50 As far as possible proposal should provide for recovery of compromise

4.50 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.51 Post Dated Cheques may be obtained for the balance payment and
4.51 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.52 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.52 In case of consortium/co-financing of projects, sharing security on
For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.31 In case of defaults on not adhering to installment deadlines penal 5.31 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.32 Right of forfeiture in case of persistent defaults despite fixation of 5.32 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.31 A Compromise Deed should be documented as per the advice of Legal 6.31 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.32 The Legal Department should ensure that all documents/ securities are 6.32 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

97
 valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

31) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
32) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

98
  The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
valuer is lower than the loan outstanding/security not created. years No change

No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any No change
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

99
  For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.106 The borrower should come forward with a detailed settlement proposal 10.106 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS

100
 amount proposed.
 Status of operation of the plant – Operational or
10.107 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.107 The concerned dealing official from Technical Department shall

10.108 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.109 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.110 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.108 The proposal should be examined in details by the Settlement
10.111 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.109 Recommendations of the Settlement Advisory Committee shall be
10.112 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.110 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.111 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.112 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.33 These guidelines have been framed with a view to provide 1.33 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.34 The compromise should be a negotiated settlement under which 1.34 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.

101
 Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.17 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.17 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.49 Foregoing of lawyers fees and other legal, incidental charges. 4.17 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.50 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

102
 4.51 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited
to the P & L A/c). to the P & L A/c).
No change
4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount
deserving cases. which shall be charged as follows :
Modified to have more clarity
 No interest – if OTS amount is paid within 60 days from the date of
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter) -do-

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days. -do-
 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment.
-do-
Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days
from the date of dispatch of the sanction letter).
No change

4.53 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.53 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above No change

4.54 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.54 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
No change
4.55 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.55 In case of consortium/co-financing of projects, sharing security on
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed. For more clarity.

5. Other issues 5.33 In case of defaults on not adhering to installment deadlines penal 5.33 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.34 Right of forfeiture in case of persistent defaults despite fixation of 5.34 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.33 A Compromise Deed should be documented as per the advice of Legal 6.33 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.34 The Legal Department should ensure that all documents/ securities are 6.34 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change

103
 amount 7.2 If in operation, financial performance in the last three years.
No change
7.2 If in operation, financial performance in the last three years.

7.3 Value of the security available including net worth of the borrowers/
guarantors. No change
7.3 Value of the security available including net worth of the borrowers/
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
7.4 Valuation of assets:-
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

33) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
34) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

104
  The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
valuer is lower than the loan outstanding/security not created. years No change

No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any No change
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at

105
 applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.113 The borrower should come forward with a detailed settlement proposal 10.113 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

106
  Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.114 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.114 The concerned dealing official from Technical Department shall

10.115 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.116 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.117 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.115 The proposal should be examined in details by the Settlement
10.118 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.116 Recommendations of the Settlement Advisory Committee shall be
10.119 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.117 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.118 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.119 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

107
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.35 These guidelines have been framed with a view to provide 1.35 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.36 The compromise should be a negotiated settlement under which 1.36 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

108
3. Cut-off-Date 3.18 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.18 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.52 Foregoing of lawyers fees and other legal, incidental charges. 4.18 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.53 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.54 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.56 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.56 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.57 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.57 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.58 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.58 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.35 In case of defaults on not adhering to installment deadlines penal 5.35 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

109
 5.36 Right of forfeiture in case of persistent defaults despite fixation of 5.36 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.35 A Compromise Deed should be documented as per the advice of Legal 6.35 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.36 The Legal Department should ensure that all documents/ securities are 6.36 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

110
A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

35) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
36) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever

111
 is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower. No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower.
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the

112
 GM(PMES), Member Meeting)
DGM(MS)/ (FS), Member  All HODs (Technical/F&A/Legal)
AGM(FS), Convenor  Internal Auditors
Sr Manager( Law), Member  Legal Auditors
Internal Auditor, Member  Recovery Head, Convener.
Legal Auditor, Member

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.120 The borrower should come forward with a detailed settlement proposal 10.120 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.121 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.121 The concerned dealing official from Technical Department shall

10.122 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.123 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.124 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.122 The proposal should be examined in details by the Settlement
Advisory Committee.
10.125 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.123 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.126 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.124 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.125 Details of One Time Settlement approved by MD CMD shall be

113
 submitted to the Board for information.
10.126 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.37 These guidelines have been framed with a view to provide 1.37 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.38 The compromise should be a negotiated settlement under which 1.38 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural

114
 calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.19 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.19 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.55 Foregoing of lawyers fees and other legal, incidental charges. 4.19 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.56 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.57 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

115
 4.59 As far as possible proposal should provide for recovery of compromise 4.59 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months. amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating the state of affairs of the borrower and subject to payment of interest No change
in para 4.4 above. indicated in para 4.4 above

4.60 Post Dated Cheques may be obtained for the balance payment and 4.60 Post Dated Cheques may be obtained for the balance payment and
interest, if any. interest, if any. No change

4.61 In case where One Time Settlement is considered based on the One Time 4.61 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis, pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
the terms & conditions of the lead institutions may be followed by THE followed.
LENDER also.

5. Other issues 5.37 In case of defaults on not adhering to installment deadlines penal 5.37 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.38 Right of forfeiture in case of persistent defaults despite fixation of 5.38 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.37 A Compromise Deed should be documented as per the advice of Legal 6.37 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.38 The Legal Department should ensure that all documents/ securities are 6.38 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

116
 submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

37) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
38) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

117
  Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by No change

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created.

 Action initiated under SARFAESI Act and is pending for 3 No change

years.

Amount below the principal outstanding(maximum to the extent of the No change

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
No change
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date- No change

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower.
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.

 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at Deleted as no project in the
document rate or at present lending rate, whichever is lower. portfolio.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal

118
 Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.127 The borrower should come forward with a detailed settlement proposal 10.127 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.128 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

119
 10.128 The concerned dealing official from Technical Department shall
10.129 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.130 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.131 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.129 The proposal should be examined in details by the Settlement
Advisory Committee.
10.132 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.130 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.133 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.131 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.132 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.133 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.39 These guidelines have been framed with a view to provide 1.39 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.40 The compromise should be a negotiated settlement under which 1.40 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

120
 (c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.20 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.20 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.58 Foregoing of lawyers fees and other legal, incidental charges. 4.20 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.59 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.60 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity

121
 deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

-do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing
-do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.62 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.62 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon
No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.63 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.63 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.64 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.64 In case of consortium/co-financing of projects, sharing security on
For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.39 In case of defaults on not adhering to installment deadlines penal 5.39 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.40 Right of forfeiture in case of persistent defaults despite fixation of 5.40 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.39 A Compromise Deed should be documented as per the advice of Legal 6.39 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.40 The Legal Department should ensure that all documents/ securities are 6.40 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

122
 7.4 Valuation of assets:-
7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT
important criteria for deciding the
approved Govt. Valuer.
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

39) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
40) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not

123
 created.

100% of the principal  Action initiated under SARFAESI Act and is pending for more
than 1 year.

B : Settlement amount : Amount below principal : 100% of the Principal outstanding.

1) For NPAs over 5 years as on the cut off date and, if any two of the following B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years following condition prevail:

 Suits pending for more than 5 years  Unit lying closed for more than 5years

 Suits pending for more than 5 years

 The company has never achieved cash break even

 The company has remained unimplemented for more than 3 years  The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent years No change
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created. No change
already provided for/ written off in the books of THE LENDER)
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)

C : Settlement amount : 100% Principal + Simple Interest : Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
1) For NPAs over 3 years and less than 5 years as on the cut off date- the personal/corporate guarantors after deductible liabilities.
No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever C : Settlement amount : 100% Principal + Simple Interest :
is lower.
1) For NPAs over 3 years and less than 5 years.

100% of the Principal+ Simple Interest from the NPA Date at

2) For NPAs over 2 years but less than 3years as on the cut off date- applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
100% of the Principal+ Simple Interest covered in the gross profit earned during No change
the period of default or Simple Interest at present lending rate, whichever is
2) For NPAs over 2 years but less than 3years as on the cut off date-
lower.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
3) Cases likely to become NPA at the end of the relevant previous year/ projects average rate of disbursement) whichever is lower.
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower- 3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
100% of the Principal+ Simple Interest at document rate or at present lending to the reasons beyond the control of the borrower-
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
D : Settlement amount for specific Sectors : applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE

124
 LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower. Settlement amount may be arrived at as follows:-

 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.134 The borrower should come forward with a detailed settlement proposal 10.134 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where

125
 balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.135 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.135 The concerned dealing official from Technical Department shall

10.136 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.137 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.138 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.136 The proposal should be examined in details by the Settlement
10.139 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.137 Recommendations of the Settlement Advisory Committee shall be
10.140 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.138 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.139 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.140 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

126
 o.
1. Aim/Objectives 1.41 These guidelines have been framed with a view to provide 1.41 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.42 The compromise should be a negotiated settlement under which 1.42 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.21 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

127
 NPA Date 3.21 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.61 Foregoing of lawyers fees and other legal, incidental charges. 4.21 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.62 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.63 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.65 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.65 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.66 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.66 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.67 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.67 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.41 In case of defaults on not adhering to installment deadlines penal 5.41 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.42 Right of forfeiture in case of persistent defaults despite fixation of 5.42 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.41 A Compromise Deed should be documented as per the advice of Legal 6.41 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

128
 6.42 The Legal Department should ensure that all documents/ securities are 6.42 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

41) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&

129
 Where the financial position of the company has not improved
42) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
No change
valuer is lower than the loan outstanding/security not created. years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.

130
 the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower.
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

131
 (The decision of SAC shall be put up to the CMD)

10. Procedure 10.141 The borrower should come forward with a detailed settlement proposal 10.141 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.142 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.142 The concerned dealing official from Technical Department shall

10.143 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.144 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.145 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.143 The proposal should be examined in details by the Settlement
Advisory Committee.
10.146 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.144 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.147 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.145 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.146 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.147 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

132
 11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.43 These guidelines have been framed with a view to provide 1.43 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.44 The compromise should be a negotiated settlement under which 1.44 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood

133
 of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the For more clarity.
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.22 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.22 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.64 Foregoing of lawyers fees and other legal, incidental charges. 4.22 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.65 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.66 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.68 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.68 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.69 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.69 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

134
 4.70 In case where One Time Settlement is considered based on the One Time
4.70 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis, For more clarity.
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed.
LENDER also.

5. Other issues 5.43 In case of defaults on not adhering to installment deadlines penal 5.43 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.44 Right of forfeiture in case of persistent defaults despite fixation of 5.44 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.43 A Compromise Deed should be documented as per the advice of Legal 6.43 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.44 The Legal Department should ensure that all documents/ securities are 6.44 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after

135
 considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

43) For NPAs over 5years as on the cut- off date A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal &
Where the financial position of the company has not improved
subsequently-100% of the Principal
44) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
any two of the following conditions prevail No change
 Unit lying closed for the last 3years.

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 Suits pending for the last 3 years.

 The company has never achieved cash break even

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Project has remained unimplemented for the last 3 years
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal : 100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years  Unit lying closed for more than 5years

 Suits pending for more than 5 years

 The company has never achieved cash break even

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent No change
years
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created.
already provided for/ written off in the books of THE LENDER) No change

136
  Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)

C : Settlement amount : 100% Principal + Simple Interest : Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
1) For NPAs over 3 years and less than 5 years as on the cut off date- the personal/corporate guarantors after deductible liabilities.
No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever C : Settlement amount : 100% Principal + Simple Interest :
is lower.
1) For NPAs over 3 years and less than 5 years.

100% of the Principal+ Simple Interest from the NPA Date at

2) For NPAs over 2 years but less than 3years as on the cut off date- applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
100% of the Principal+ Simple Interest covered in the gross profit earned during
No change
the period of default or Simple Interest at present lending rate, whichever is
lower. 2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

applicable present lending rate or document rate (weighted
3) Cases likely to become NPA at the end of the relevant previous year/ projects average rate of disbursement) whichever is lower.
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower- 3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
100% of the Principal+ Simple Interest at document rate or at present lending to the reasons beyond the control of the borrower-
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
D : Settlement amount for specific Sectors : applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower.
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents

137
 alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.148 The borrower should come forward with a detailed settlement proposal 10.148 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.149 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.149 The concerned dealing official from Technical Department shall

10.150 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.151 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.152 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.

138
 10.150 The proposal should be examined in details by the Settlement
10.153 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.151 Recommendations of the Settlement Advisory Committee shall be
10.154 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
No change
10.152 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.153 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.154 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.45 These guidelines have been framed with a view to provide 1.45 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.46 The compromise should be a negotiated settlement under which 1.46 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to

139
 revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also
SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered.
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
considered
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.23 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.23 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.67 Foregoing of lawyers fees and other legal, incidental charges. 4.23 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.68 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.69 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

140
  beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
-do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory.

Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.71 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.71 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.72 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.72 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.73 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.73 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.45 In case of defaults on not adhering to installment deadlines penal 5.45 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.46 Right of forfeiture in case of persistent defaults despite fixation of 5.46 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.45 A Compromise Deed should be documented as per the advice of Legal 6.45 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.46 The Legal Department should ensure that all documents/ securities are 6.46 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of

141
 secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

45) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
46) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the

142
  Unit lying closed for more than 5years following condition prevail:

 Suits pending for more than 5 years  Unit lying closed for more than 5years

 Suits pending for more than 5 years

 The company has never achieved cash break even

 The company has remained unimplemented for more than 3 years  The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent years No change
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created.
already provided for/ written off in the books of THE LENDER) No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)

C : Settlement amount : 100% Principal + Simple Interest : Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
1) For NPAs over 3 years and less than 5 years as on the cut off date- the personal/corporate guarantors after deductible liabilities.
No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever C : Settlement amount : 100% Principal + Simple Interest :
is lower.
1) For NPAs over 3 years and less than 5 years.

100% of the Principal+ Simple Interest from the NPA Date at

2) For NPAs over 2 years but less than 3years as on the cut off date- applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
100% of the Principal+ Simple Interest covered in the gross profit earned during No change
the period of default or Simple Interest at present lending rate, whichever is
lower. 2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

applicable present lending rate or document rate (weighted
3) Cases likely to become NPA at the end of the relevant previous year/ projects average rate of disbursement) whichever is lower.
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower- 3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
100% of the Principal+ Simple Interest at document rate or at present lending to the reasons beyond the control of the borrower-
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
D : Settlement amount for specific Sectors : applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower.
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

143
 2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.155 The borrower should come forward with a detailed settlement proposal 10.155 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.

144
  The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.156 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.156 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.157 This proposal should be examined in details by the Settlement Advisory No change
Convener of SAC alongwith the detailed background note
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.158 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.159 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.157 The proposal should be examined in details by the Settlement
Advisory Committee.
10.160 Details of One Time Settlement approved by MD shall be submitted to
10.158 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.161 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.159 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.160 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.161 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.47 These guidelines have been framed with a view to provide 1.47 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.48 The compromise should be a negotiated settlement under which 1.48 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

145
2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.24 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.24 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.70 Foregoing of lawyers fees and other legal, incidental charges. 4.24 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.71 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

146
 4.72 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing -do-

 beyond 60 days upto 240 days at present lending rate on simple interest
balance basis from the date of sanction letter , if OTS
basis from the date of sanction.
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
-do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.74 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.74 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.75 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.75 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.76 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.76 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.47 In case of defaults on not adhering to installment deadlines penal 5.47 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.48 Right of forfeiture in case of persistent defaults despite fixation of 5.48 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.47 A Compromise Deed should be documented as per the advice of Legal 6.47 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.48 The Legal Department should ensure that all documents/ securities are 6.48 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at

147
 compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount 7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/
guarantors. No change
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

47) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
48) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

148
  Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even No change
 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/ security not created.  Project has remained unimplemented for the last 3 years

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
100% of the principal created.

 Action initiated under SARFAESI Act and is pending for more

B : Settlement amount : Amount below principal : than 1 year.

1) For NPAs over 5 years as on the cut off date and, if any two of the following 100% of the Principal outstanding.
condition prevail:
B : Settlement amount : Amount below principal :
 Unit lying closed for more than 5years
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Suits pending for more than 5 years following condition prevail:

 Unit lying closed for more than 5years

 The company has never achieved cash break even
 Suits pending for more than 5 years
 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent
valuer is lower than the loan outstanding/security not created.  The company project has remained unimplemented for more than 3 No change
years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
Amount below the principal outstanding(maximum to the extent of the amount outstanding.
already provided for/ written off in the books of THE LENDER) No change
 In case security is not created.

 Action initiated under SARFAESI Act and is pending for 3

No change
years.

Amount below the principal outstanding(maximum to the extent of the

C : Settlement amount : 100% Principal + Simple Interest : amount already provided for/ written off in the books of THE LENDER)

1) For NPAs over 3 years and less than 5 years as on the cut off date- Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
100% of the Principal+ Simple Interest covered in the gross profit earned, if any the personal/corporate guarantors after deductible liabilities. No change
during the period of default or Simple Interest at present lending rate whichever
is lower.
C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date-
100% of the Principal+ Simple Interest from the NPA Date at
100% of the Principal+ Simple Interest covered in the gross profit earned during applicable present lending rate or document rate (weighted
the period of default or Simple Interest at present lending rate, whichever is average rate of disbursement) whichever is lower. No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

3) Cases likely to become NPA at the end of the relevant previous year/ projects 100% of the Principal+ Simple Interest from the NPA Date at
under implementation which are delayed/ projects abandoned due to the reasons applicable present lending rate or document rate (weighted
beyond the control of the borrower- average rate of disbursement) whichever is lower.

100% of the Principal+ Simple Interest at document rate or at present lending 3) Cases likely to become NPA at the end of the relevant previous year/
rate, whichever is lower. projects under implementation which are delayed/ projects abandoned due
to the reasons beyond the control of the borrower-

149
 D : Settlement amount for specific Sectors :
100% of the Principal+ Simple Interest from the NPA Date at
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial applicable present lending rate or document rate (weighted
demonstration category, the Settlement amount may be arrived that as follows:- average rate of disbursement) whichever is lower.
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at than Grid connected)/MSW and SPV which is not being financed by THE
document rate or at present lending rate, whichever is lower. LENDER since 2002-03 and for projects under FOR WHICH SECTION
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
 For NPAs between 2-5 years old-100% of the Principal. Settlement amount may be arrived at as follows:-
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
 For NPAs over 8 years old-50% ot the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.162 The borrower should come forward with a detailed settlement proposal 10.162 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

150
  The valuation of mortgaged assets.
 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.163 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.163 The concerned dealing official from Technical Department shall

10.164 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.165 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.166 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.164 The proposal should be examined in details by the Settlement
10.167 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.165 Recommendations of the Settlement Advisory Committee shall be
10.168 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.166 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.167 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.168 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

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 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.49 These guidelines have been framed with a view to provide 1.49 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.50 The compromise should be a negotiated settlement under which 1.50 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

152
 Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.25 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.25 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.73 Foregoing of lawyers fees and other legal, incidental charges. 4.25 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.74 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.75 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.77 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.77 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.78 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.78 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.79 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.79 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.49 In case of defaults on not adhering to installment deadlines penal 5.49 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is

153
 interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.50 Right of forfeiture in case of persistent defaults despite fixation of 5.50 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.49 A Compromise Deed should be documented as per the advice of Legal 6.49 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.50 The Legal Department should ensure that all documents/ securities are 6.50 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

154
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

49) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
50) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

155
 the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower. No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member

156
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.169 The borrower should come forward with a detailed settlement proposal 10.169 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.170 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.170 The concerned dealing official from Technical Department shall

10.171 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.172 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.173 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.171 The proposal should be examined in details by the Settlement
Advisory Committee.
10.174 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.172 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.175 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.173 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

157
 10.174 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.175 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.51 These guidelines have been framed with a view to provide 1.51 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.52 The compromise should be a negotiated settlement under which 1.52 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower

158
 or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.26 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.26 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.76 Foregoing of lawyers fees and other legal, incidental charges. 4.26 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.77 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.78 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

159
 4.80 As far as possible proposal should provide for recovery of compromise
4.80 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.81 Post Dated Cheques may be obtained for the balance payment and
4.81 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.82 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.82 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.51 In case of defaults on not adhering to installment deadlines penal 5.51 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.52 Right of forfeiture in case of persistent defaults despite fixation of 5.52 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.51 A Compromise Deed should be documented as per the advice of Legal 6.51 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.52 The Legal Department should ensure that all documents/ securities are 6.52 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

160
  The inspection of the secured assets shall be carried out before
submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

51) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
52) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

161
  The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
No change
valuer is lower than the loan outstanding/security not created. years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower.
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/

162
 third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.176 The borrower should come forward with a detailed settlement proposal 10.176 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.177 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

163
 10.177 The concerned dealing official from Technical Department shall
10.178 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note No change
(covering proposal of the borrower, eligibility as per THE
10.179 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.180 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.178 The proposal should be examined in details by the Settlement
10.181 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.179 Recommendations of the Settlement Advisory Committee shall be
10.182 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.180 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.181 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.182 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.53 These guidelines have been framed with a view to provide 1.53 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.54 The compromise should be a negotiated settlement under which 1.54 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change

164
 And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.27 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.27 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.79 Foregoing of lawyers fees and other legal, incidental charges. 4.27 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.80 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.81 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

165
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

-do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing
-do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.83 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.83 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon
No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.84 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.84 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.85 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.85 In case of consortium/co-financing of projects, sharing security on
For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.53 In case of defaults on not adhering to installment deadlines penal 5.53 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.54 Right of forfeiture in case of persistent defaults despite fixation of 5.54 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.53 A Compromise Deed should be documented as per the advice of Legal 6.53 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.54 The Legal Department should ensure that all documents/ securities are 6.54 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/

166
 guarantors. 7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more 7.4 Valuation of assets:-
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT
important criteria for deciding the
approved Govt. Valuer.
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

53) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
54) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

167
  Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.

100% of the principal  Action initiated under SARFAESI Act and is pending for more
than 1 year.

B : Settlement amount : Amount below principal : 100% of the Principal outstanding.

1) For NPAs over 5 years as on the cut off date and, if any two of the following B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years following condition prevail:

 Suits pending for more than 5 years  Unit lying closed for more than 5years

 Suits pending for more than 5 years

 The company has never achieved cash break even

 The company has remained unimplemented for more than 3 years  The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent years No change
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created. No change
already provided for/ written off in the books of THE LENDER)
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)

C : Settlement amount : 100% Principal + Simple Interest : Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
1) For NPAs over 3 years and less than 5 years as on the cut off date- the personal/corporate guarantors after deductible liabilities.
No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever C : Settlement amount : 100% Principal + Simple Interest :
is lower.
1) For NPAs over 3 years and less than 5 years.

100% of the Principal+ Simple Interest from the NPA Date at

2) For NPAs over 2 years but less than 3years as on the cut off date- applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
100% of the Principal+ Simple Interest covered in the gross profit earned during No change
the period of default or Simple Interest at present lending rate, whichever is
2) For NPAs over 2 years but less than 3years as on the cut off date-
lower.
100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
3) Cases likely to become NPA at the end of the relevant previous year/ projects average rate of disbursement) whichever is lower.
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower- 3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
100% of the Principal+ Simple Interest at document rate or at present lending to the reasons beyond the control of the borrower-
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
D : Settlement amount for specific Sectors : applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

168
 1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other
than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower. Settlement amount may be arrived at as follows:-

 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs between 5-8 years old-75% of the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.
 For NPAs over 8 years old-50% ot the Principal.

 For NPAs above 5-8 years old-50% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.183 The borrower should come forward with a detailed settlement proposal 10.183 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,

169
 if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.184 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.184 The concerned dealing official from Technical Department shall

10.185 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.186 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.187 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.185 The proposal should be examined in details by the Settlement
10.188 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.186 Recommendations of the Settlement Advisory Committee shall be
10.189 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.187 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.188 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.189 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

170
S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification
o.
1. Aim/Objectives 1.55 These guidelines have been framed with a view to provide 1.55 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.56 The compromise should be a negotiated settlement under which 1.56 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.28 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this

171
 This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.28 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.82 Foregoing of lawyers fees and other legal, incidental charges. 4.28 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.83 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.84 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.86 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.86 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.87 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.87 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.88 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.88 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.55 In case of defaults on not adhering to installment deadlines penal 5.55 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.56 Right of forfeiture in case of persistent defaults despite fixation of 5.56 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

172
6. Legal 6.55 A Compromise Deed should be documented as per the advice of Legal 6.55 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.56 The Legal Department should ensure that all documents/ securities are 6.56 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

55) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&

173
 Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
56) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
No change
valuer is lower than the loan outstanding/security not created. years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

174
 2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors

175
 Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.190 The borrower should come forward with a detailed settlement proposal 10.190 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.191 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.191 The concerned dealing official from Technical Department shall

10.192 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.193 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.194 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.192 The proposal should be examined in details by the Settlement
Advisory Committee.
10.195 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.193 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.196 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.194 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.195 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.196 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific

176
 these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.57 These guidelines have been framed with a view to provide 1.57 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.58 The compromise should be a negotiated settlement under which 1.58 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are

177
 not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.29 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.29 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.85 Foregoing of lawyers fees and other legal, incidental charges. 4.29 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.86 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.87 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.89 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.89 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

178
 4.90 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.90 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
No change

4.91 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.91 In case of consortium/co-financing of projects, sharing security on
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
LENDER also. followed.

5. Other issues 5.57 In case of defaults on not adhering to installment deadlines penal 5.57 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.58 Right of forfeiture in case of persistent defaults despite fixation of 5.58 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.57 A Compromise Deed should be documented as per the advice of Legal 6.57 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.58 The Legal Department should ensure that all documents/ securities are 6.58 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

179
  Value of securities (saleable/realizable value of physical
assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

57) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
58) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent No change
years
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan

180
 outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created.
already provided for/ written off in the books of THE LENDER) No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest : Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
1) For NPAs over 3 years and less than 5 years as on the cut off date- the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any No change
during the period of default or Simple Interest at present lending rate whichever C : Settlement amount : 100% Principal + Simple Interest :
is lower.
1) For NPAs over 3 years and less than 5 years.

100% of the Principal+ Simple Interest from the NPA Date at

2) For NPAs over 2 years but less than 3years as on the cut off date- applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
100% of the Principal+ Simple Interest covered in the gross profit earned during
the period of default or Simple Interest at present lending rate, whichever is No change
lower. 2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

applicable present lending rate or document rate (weighted
3) Cases likely to become NPA at the end of the relevant previous year/ projects average rate of disbursement) whichever is lower.
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower- 3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
100% of the Principal+ Simple Interest at document rate or at present lending to the reasons beyond the control of the borrower-
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
D : Settlement amount for specific Sectors : applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower.
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

181
 Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.197 The borrower should come forward with a detailed settlement proposal 10.197 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.198 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.198 The concerned dealing official from Technical Department shall

10.199 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE

182
 10.200 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.201 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.199 The proposal should be examined in details by the Settlement
10.202 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.200 Recommendations of the Settlement Advisory Committee shall be
10.203 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval. No change
10.201 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.202 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.203 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.59 These guidelines have been framed with a view to provide 1.59 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.60 The compromise should be a negotiated settlement under which 1.60 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower.

183
 beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to remote.
No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent opportunity cost of delay in early recovery shall also have to be
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the considered For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.30 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.30 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.88 Foregoing of lawyers fees and other legal, incidental charges. 4.30 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.89 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.90 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

184
  Simple interest @ prevailing sector rate on reducing
 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days. -do-
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and
lower plus 1%.
upto the date of entire payment.
-do-
Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days
from the date of dispatch of the sanction letter).
No change

4.92 As far as possible proposal should provide for recovery of compromise

4.92 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above No change

4.93 Post Dated Cheques may be obtained for the balance payment and
4.93 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any.
No change
4.94 In case where One Time Settlement is considered based on the One Time
4.94 In case of consortium/co-financing of projects, sharing security on
Settlement of other financial institutions sharing security on pari-pasu basis,
pari-passu basis, OTS terms and conditions of the co-lenders may be
the terms & conditions of the lead institutions may be followed by THE
followed. For more clarity.
LENDER also.

5. Other issues 5.59 In case of defaults on not adhering to installment deadlines penal 5.59 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.60 Right of forfeiture in case of persistent defaults despite fixation of 5.60 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.59 A Compromise Deed should be documented as per the advice of Legal 6.59 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.60 The Legal Department should ensure that all documents/ securities are 6.60 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The

185
 borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

59) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
60) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.

186
B : Settlement amount : Amount below principal : 100% of the Principal outstanding.

1) For NPAs over 5 years as on the cut off date and, if any two of the following B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years following condition prevail:

 Suits pending for more than 5 years  Unit lying closed for more than 5years

 Suits pending for more than 5 years

 The company has never achieved cash break even

 The company has remained unimplemented for more than 3 years  The company project has never achieved cash break even

 The company project has remained unimplemented for more than 3

 Realizable value of the mortgaged assets as assessed by an independent years No change
valuer is lower than the loan outstanding/security not created.
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.

Amount below the principal outstanding(maximum to the extent of the amount  In case security is not created.
No change
already provided for/ written off in the books of THE LENDER)
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)

C : Settlement amount : 100% Principal + Simple Interest : Amount below the principal outstanding but shall not be less than
the saleable/realizable value of security and positive networth of
1) For NPAs over 3 years and less than 5 years as on the cut off date- the personal/corporate guarantors after deductible liabilities.
No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever C : Settlement amount : 100% Principal + Simple Interest :
is lower.
1) For NPAs over 3 years and less than 5 years.

100% of the Principal+ Simple Interest from the NPA Date at

2) For NPAs over 2 years but less than 3years as on the cut off date- applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
100% of the Principal+ Simple Interest covered in the gross profit earned during No change
the period of default or Simple Interest at present lending rate, whichever is
lower. 2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

applicable present lending rate or document rate (weighted
3) Cases likely to become NPA at the end of the relevant previous year/ projects average rate of disbursement) whichever is lower.
under implementation which are delayed/ projects abandoned due to the reasons
beyond the control of the borrower- 3) Cases likely to become NPA at the end of the relevant previous year/
projects under implementation which are delayed/ projects abandoned due
100% of the Principal+ Simple Interest at document rate or at present lending to the reasons beyond the control of the borrower-
rate, whichever is lower.
100% of the Principal+ Simple Interest from the NPA Date at
D : Settlement amount for specific Sectors : applicable present lending rate or document rate (weighted
average rate of disbursement) whichever is lower.
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial
demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
LENDER since 2002-03 and for projects under FOR WHICH SECTION
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
document rate or at present lending rate, whichever is lower.
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the

187
  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.

 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.204 The borrower should come forward with a detailed settlement proposal 10.204 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since

188
 commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
10.205 The concerned dealing from Technical Department should examine the Shutdown, if shutdown since when.
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.205 The concerned dealing official from Technical Department shall

10.206 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE No change
10.207 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.208 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.206 The proposal should be examined in details by the Settlement
10.209 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information 10.207 Recommendations of the Settlement Advisory Committee shall be
10.210 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.208 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy. No change

10.209 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.210 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.61 These guidelines have been framed with a view to provide 1.61 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.62 The compromise should be a negotiated settlement under which 1.62 The compromise should be a negotiated settlement under
No change

189
 THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.31 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.31 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

190
4. Re-payment 4.91 Foregoing of lawyers fees and other legal, incidental charges. 4.31 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.92 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.93 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.95 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.95 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.96 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.96 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.97 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.97 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.61 In case of defaults on not adhering to installment deadlines penal 5.61 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.62 Right of forfeiture in case of persistent defaults despite fixation of 5.62 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.61 A Compromise Deed should be documented as per the advice of Legal 6.61 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.62 The Legal Department should ensure that all documents/ securities are 6.62 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

191
7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

61) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
62) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

192
  Suits pending for the last 3 years.
 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
valuer is lower than the loan outstanding/security not created. years No change

No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any No change
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.

193
 beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.211 The borrower should come forward with a detailed settlement proposal 10.211 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

194
 Alongwith application, the borrower shall provide the following
documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.212 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.212 The concerned dealing official from Technical Department shall

10.213 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.214 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.215 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.213 The proposal should be examined in details by the Settlement
Advisory Committee.
10.216 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.214 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.217 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.215 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.216 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.217 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

195
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.63 These guidelines have been framed with a view to provide 1.63 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.64 The compromise should be a negotiated settlement under which 1.64 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the

196
 One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.32 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.32 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.94 Foregoing of lawyers fees and other legal, incidental charges. 4.32 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.95 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.96 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.98 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.98 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.99 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.99 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.100 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.100 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

197
5. Other issues 5.63 In case of defaults on not adhering to installment deadlines penal 5.63 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.64 Right of forfeiture in case of persistent defaults despite fixation of 5.64 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.63 A Compromise Deed should be documented as per the advice of Legal 6.63 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.64 The Legal Department should ensure that all documents/ securities are 6.64 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.

198
  Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

63) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
64) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if No change
 Unit lying closed for the last 3years. any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :

199
 Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower. No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.

 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting

200
 Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.218 The borrower should come forward with a detailed settlement proposal 10.218 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.219 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.219 The concerned dealing official from Technical Department shall

10.220 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.221 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.222 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.220 The proposal should be examined in details by the Settlement
Advisory Committee.
10.223 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.221 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.224 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change

201
 10.222 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

10.223 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.224 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.65 These guidelines have been framed with a view to provide 1.65 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.66 The compromise should be a negotiated settlement under which 1.66 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time

202
 or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
2.3 In case of pending court cases, it should be ensured that there is a likelihood For more clarity .
of inordinate delay involved in the legal process to realize dues. The cost to be
incurred for maintenance of securities and continuation of legal action would also 2.3 In case of Pending Court cases including action initiated under
have to be considered. SARFAESI Act, it should be ensured that there is a likelihood of inordinate
delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent
considered
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the For more clarity.
One Time Settlement proposal.
2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.33 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.33 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.97 Foregoing of lawyers fees and other legal, incidental charges. 4.33 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.98 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.99 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory

203
 within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.101 As far as possible proposal should provide for recovery of compromise

4.101 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.102 Post Dated Cheques may be obtained for the balance payment and
4.102 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.103 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.103 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.65 In case of defaults on not adhering to installment deadlines penal 5.65 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.66 Right of forfeiture in case of persistent defaults despite fixation of 5.66 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.65 A Compromise Deed should be documented as per the advice of Legal 6.65 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.66 The Legal Department should ensure that all documents/ securities are 6.66 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

204
  The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

65) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
66) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

205
  The company has remained unimplemented for more than 3 years
 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
valuer is lower than the loan outstanding/security not created. years No change

No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created.
No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any No change
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

206
 2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.225 The borrower should come forward with a detailed settlement proposal 10.225 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.

207
 10.226 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.226 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.227 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.228 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.229 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.227 The proposal should be examined in details by the Settlement
Advisory Committee.
10.230 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.228 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.231 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.229 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.230 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.231 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.67 These guidelines have been framed with a view to provide 1.67 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.68 The compromise should be a negotiated settlement under which 1.68 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)

208
 No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.34 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.34 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.100 Foregoing of lawyers fees and other legal, incidental charges. 4.34 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.101 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.102 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

209
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

sanction letter (excluding three days from the date of -do-
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS -do-
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and
lower plus 1%.
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.104 As far as possible proposal should provide for recovery of compromise

4.104 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.105 Post Dated Cheques may be obtained for the balance payment and
4.105 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.106 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.106 In case of consortium/co-financing of projects, sharing security on
pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
the terms & conditions of the lead institutions may be followed by THE
LENDER also. followed.

5. Other issues 5.67 In case of defaults on not adhering to installment deadlines penal 5.67 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.68 Right of forfeiture in case of persistent defaults despite fixation of 5.68 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.67 A Compromise Deed should be documented as per the advice of Legal 6.67 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.68 The Legal Department should ensure that all documents/ securities are 6.68 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

210
 7.3 Value of the security available including net worth of the borrowers/
guarantors.
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
7.4 Valuation of assets:-

 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

67) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
68) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change

211
  Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
valuer is lower than the loan outstanding/security not created. years No change

No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any No change
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.

212
 demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.232 The borrower should come forward with a detailed settlement proposal 10.232 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at

213
 the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.233 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.233 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.234 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.235 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.236 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.234 The proposal should be examined in details by the Settlement
Advisory Committee.
10.237 Details of One Time Settlement approved by MD shall be submitted to
10.235 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.238 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.236 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.237 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.238 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

214
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.69 These guidelines have been framed with a view to provide 1.69 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.70 The compromise should be a negotiated settlement under which 1.70 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

215
 Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.35 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.35 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.103 Foregoing of lawyers fees and other legal, incidental charges. 4.35 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.104 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.105 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.107 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.107 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.108 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.108 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.109 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.109 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.69 In case of defaults on not adhering to installment deadlines penal 5.69 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is

216
 interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.70 Right of forfeiture in case of persistent defaults despite fixation of 5.70 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.69 A Compromise Deed should be documented as per the advice of Legal 6.69 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.70 The Legal Department should ensure that all documents/ securities are 6.70 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

217
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

69) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
70) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

218
 the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower. No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member

219
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.239 The borrower should come forward with a detailed settlement proposal 10.239 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.240 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.240 The concerned dealing official from Technical Department shall

10.241 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.242 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.243 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.241 The proposal should be examined in details by the Settlement
Advisory Committee.
10.244 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.242 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.245 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.243 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

220
 10.244 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.245 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

221
 Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.71 These guidelines have been framed with a view to provide 1.71 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.72 The compromise should be a negotiated settlement under which 1.72 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt

222
 Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.36 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.36 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.106 Foregoing of lawyers fees and other legal, incidental charges. 4.36 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.107 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.108 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.110 As far as possible proposal should provide for recovery of compromise

amount in one lump sum or maximum within a period of 6-12 months. 4.110 As far as possible proposal shall provide for recovery of compromise
However, the period may be extended upto 24 months depending upon the amount in one lump sum or maximum within a period of 6-12 months.
state of affairs of the borrower and subject to payment of interest indicating However, the period may be extended upto 24 months depending upon No change
in para 4.4 above. the state of affairs of the borrower and subject to payment of interest
indicated in para 4.4 above

4.111 Post Dated Cheques may be obtained for the balance payment and
interest, if any. 4.111 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change

4.112 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.112 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.71 In case of defaults on not adhering to installment deadlines penal 5.71 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is

223
 interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.72 Right of forfeiture in case of persistent defaults despite fixation of 5.72 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.71 A Compromise Deed should be documented as per the advice of Legal 6.71 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.72 The Legal Department should ensure that all documents/ securities are 6.72 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.

224
  Industry status.
 Market/product consideration and technology etc.

A : Settlement amount : 100% Principal outstanding However, the following broad guidelines shall be followed :

71) For NPAs over 5years as on the cut- off date

& A : Settlement amount : 100% Principal outstanding
Where the financial position of the company has not improved subsequently- No change
100% of the Principal 1) For NPAs over 5years as on the NPA date
&
Where the financial position of the company has not improved
72) For NPAs over 3 years and less than 5 years as on the cut off date and if any subsequently-100% of the Principal
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. No change
any two of the following conditions prevail

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3 No change
valuer is lower than the loan outstanding/security not created. years
No change

 Realizable value of the mortgaged assets as assessed by

Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of

225
 the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower. No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal. Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member

226
 CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.246 The borrower should come forward with a detailed settlement proposal 10.246 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.247 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

10.247 The concerned dealing official from Technical Department shall

10.248 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the No change
Committee. Convener of SAC alongwith the detailed background note
(covering proposal of the borrower, eligibility as per THE
10.249 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.250 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.248 The proposal should be examined in details by the Settlement
Advisory Committee.
10.251 Details of One Time Settlement approved by MD shall be submitted to
the Board for information 10.249 Recommendations of the Settlement Advisory Committee shall be
placed before MD CMD for consideration and approval.
10.252 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. No change
10.250 MD CMD is authorized to approve the One Time Settlement
proposals strictly as per the above stated policy.

227
 10.251 Details of One Time Settlement approved by MD CMD shall be
submitted to the Board for information.
10.252 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.73 These guidelines have been framed with a view to provide 1.73 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.74 The compromise should be a negotiated settlement under which 1.74 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)
No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower

228
 or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
No change
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.37 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.37 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.109 Foregoing of lawyers fees and other legal, incidental charges. 4.37 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.110 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.111 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

4.4 Repayment of settlement amount on instalments may be considered on

4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of -do-
sanction letter (excluding three days from the date of
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 beyond 60 days upto 240 days at present lending rate on simple interest  Simple interest @ prevailing sector rate on reducing -do-
basis from the date of sanction. balance basis from the date of sanction letter , if OTS
amount is paid beyond 60 days and upto 240 days.

 beyond 240 days at documented rate/present lending rate which ever is  Simple interest @ prevailing sector rate + 1% on reducing
lower plus 1%. balance basis – for OTS amount paid beyond 240 days and -do-
upto the date of entire payment.

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

229
 4.113 As far as possible proposal should provide for recovery of compromise
4.113 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon No change
state of affairs of the borrower and subject to payment of interest indicating
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.114 Post Dated Cheques may be obtained for the balance payment and
4.114 Post Dated Cheques may be obtained for the balance payment and
interest, if any. No change
interest, if any.

4.115 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.115 In case of consortium/co-financing of projects, sharing security on For more clarity.
the terms & conditions of the lead institutions may be followed by THE pari-passu basis, OTS terms and conditions of the co-lenders may be
LENDER also. followed.

5. Other issues 5.73 In case of defaults on not adhering to installment deadlines penal 5.73 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.74 Right of forfeiture in case of persistent defaults despite fixation of 5.74 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.73 A Compromise Deed should be documented as per the advice of Legal 6.73 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.74 The Legal Department should ensure that all documents/ securities are 6.74 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

7.3 Value of the security available including net worth of the borrowers/
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.
guarantors.

7.4 Valuation of assets:-

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
 Projects where principal outstanding is upto Rs. 25.00 lakhs : The
borrower shall provide valuation of secured assets from CBDT Valuation of assets is an
approved Govt. Valuer. important criteria for deciding the
quantum of OTS amount.
 Projects where principal outstanding is above Rs. 25.00 lakhs and
upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

230
  The inspection of the secured assets shall be carried out before
submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

73) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
74) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change
 Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.
 Realizable value of the mortgaged assets as assessed by an
independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
B : Settlement amount : Amount below principal :
condition prevail:
1) ) For NPAs over 5 years as on the NPA date and, if any two of the
 Unit lying closed for more than 5years
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

231
  The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
No change
valuer is lower than the loan outstanding/security not created. years
No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change

 Action initiated under SARFAESI Act and is pending for 3

years. No change

Amount below the principal outstanding(maximum to the extent of the

amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities. No change
100% of the Principal+ Simple Interest covered in the gross profit earned, if any
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
No change
the period of default or Simple Interest at present lending rate, whichever is
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.
demonstration category, the Settlement amount may be arrived that as follows:-
D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower.
LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
portfolio.
 For NPAs between 5-8 years old-75% of the Principal.  For NPAs of 2 years or less-100% of the Principal+ Simple Interest at
document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.
 For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third
party sale with dual power mode-50% of the Principal.  For NPAs above 5-8 years old-50% of the Principal outstanding.

 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/

232
 third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.253 The borrower should come forward with a detailed settlement proposal 10.253 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at
the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.254 The concerned dealing from Technical Department should examine the
proposal and arrive at a compromise proposal.  Outstanding recoveries from sale of power.

233
 10.254 The concerned dealing official from Technical Department shall
10.255 This proposal should be examined in details by the Settlement Advisory examine the proposal. The proposal shall be forwarded to the
Committee. Convener of SAC alongwith the detailed background note No change
(covering proposal of the borrower, eligibility as per THE
10.256 Recommendations of the Settlement Advisory Committee should be LENDER Guidelines, Examination of the Proposal and
placed before MD for his consideration. Observations) and the tentative Checklist (Appendix) for
perusal and consideration by SAC.
10.257 MD is authorized to approve the One Time Settlement proposals strictly
as per the above stated policy.
10.255 The proposal should be examined in details by the Settlement
10.258 Details of One Time Settlement approved by MD shall be submitted to Advisory Committee.
the Board for information
10.256 Recommendations of the Settlement Advisory Committee shall be
10.259 All other One Time Settlement proposals having deviation from the placed before MD CMD for consideration and approval.
above policy shall be put up to the Board for approval.
10.257 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.

10.258 Details of One Time Settlement approved by MD CMD shall be

submitted to the Board for information.
10.259 All other One Time Settlement proposals having deviation(s) from
the above policy shall be put up to the Board for approval.
11. Others 11.1 As far as possible, there should not be any material deviation from the 11.1 As far as possible, there should not be any material deviation from the No change
general principles of compromise. If any deviation from the specific provisions of general principles of compromise. If any deviation from the specific
these guidelines take place the same shall be submitted to the Board for provisions of these guidelines take place the same shall be submitted to the
approval. Board for approval.

11.2 The outside members of the Settlement Advisory Committee shall be paid 11.2 The outside members of the Settlement Advisory Committee shall be No change
sitting free for each meeting as per guidelines in force from time to time. paid sitting free for each meeting as per guidelines in force from time to
time.

Sub: Comparative Analysis of policy for One Time Settlement (OTS)

S.N Particulars Existing Policy (Effective from18.3.2002) Proposed Policy Reason/Justification

o.
1. Aim/Objectives 1.75 These guidelines have been framed with a view to provide 1.75 These guidelines have been framed with a view to provide No change
additional avenue for recovery for the purpose of recycling the funds of additional avenue for recovery for the purpose of recycling the
Non-Performing Assets (NPAs). funds of Non-Performing Assets (NPAs).

1.76 The compromise should be a negotiated settlement under which 1.76 The compromise should be a negotiated settlement under
THE LENDER should ensure to recover its dues to the maximum extent which THE LENDER should ensure to recover its dues to the No change
possible at minimum sacrifice by taking into consideration the facts and maximum extent possible at minimum sacrifice by taking into
circumstances of each case. consideration the facts and circumstances of each case.

2. Basic Eligibility 2.1 (a) The account should be NPA of at least 2 years 2.1 (a) The account is NPA of at least 2 years To avoid contradiction in para ‘a’
and ‘c’ of the existing policy.
Criteria And/or And /or

(b) Account that is suit filed (decreed or otherwise) (b) Account that is suit filed (decreed or otherwise)

234
 No change
And/or And/or

(c) Cases likely to become NPA at the end of the relevant financing year, (c) Cases likely to become NPA at the end of the relevant financing year,
having long term problems or industry related problems, reasonable chances of having long term problems or industry related problems, reasonable No change
realization of security appear bleak, the primary/collateral securities are chances of realization of security appear bleak, the primary/collateral
insufficient to cover the out standings and projects under implementation which securities are insufficient to cover the out standings and projects under
are delayed/ projects abandoned due to the reasons beyond the control of the implementation which are delayed/ projects abandoned due to the reasons
borrower. beyond the control of the borrower
And/or
(d) The company is under purview of
BIFR/AAIFR/DRT/DRAT/SARFEASI and no acceptable rehabilitation/ New eligibility criteria added to
revival proposal has been furnished. speed-up recovery process.
or
(e) The unit is lying closed and chances of revival are remote
or
(f) The company is under the purview of official liquidator and
liquidator is going to take long time
or
(g) Other institutions/banks have sanctioned OTS to the borrower
or
(h) Projects which have suffered from Force majure and /or natural
calamities and chances of revival/ regularization of account are
remote.
2.2 The defaults should not be willful. Cases of fraud and malfeasance are not to No change
be covered. The default should be for circumstances beyond the control of the
borrower. 2.2 The defaults should not be willful. Cases of fraud and malfeasance are
not to be covered. The default is due to circumstances beyond the control
of the borrower.
For more clarity .
2.3 In case of pending court cases, it should be ensured that there is a likelihood
of inordinate delay involved in the legal process to realize dues. The cost to be 2.3 In case of Pending Court cases including action initiated under
incurred for maintenance of securities and continuation of legal action would also SARFAESI Act, it should be ensured that there is a likelihood of inordinate
have to be considered. delay involved in the legal process to realize dues. The cost to be incurred
for maintenance of securities and continuation of legal action alongwith
opportunity cost of delay in early recovery shall also have to be
2.4 In cases where Debt Recovery Tribunal proceedings are in progress, Consent considered
For more clarity.
Degree will have to be obtained from the Court/Debt Recovery Tribunal after the
One Time Settlement proposal. 2.4 In cases where Debt Recovery Tribunal proceedings are in progress,
Consent Degree as far as possible shall be obtained from the Court/Debt
Recovery Tribunal after the One Time Settlement proposal.

3. Cut-off-Date 3.38 A cut off date for the purposes of compromise should be ascertained. A cut off date for the purposes of compromise should be ascertained. this
This may be the date on which the account first defaulted in payment of may be the date on which the account first defaulted in payment of
interest/principal and the default continues. interest/principal and the default continues.

NPA Date
3.38 Cut-off Date for the purpose of OTS shall be the date on To simplify the calculation of
which account is identified as Non-performing Assets (NPA) in quantum of OTS amount.
the books of accounts as on the balance sheet date i.e.
presently 31st March.

4. Re-payment 4.112 Foregoing of lawyers fees and other legal, incidental charges. 4.38 Foregoing of lawyers fees and other legal, incidental charges No change
Terms
4.113 Foregoing of penal interest/liquidated damages. 4.2 Foregoing of additional interest/liquidated damages. No change

4.114 Foregoing of interest (foregoing should also include interest due to THE 4.3 Foregoing of interest (foregoing should also include interest due to THE
LENDER but not charged/debited to the borrowers account and not credited LENDER but not charged/debited to the borrowers account and not credited No change
to the P & L A/c). to the P & L A/c).

235
 4.4 Repayment of settlement amount on instalments may be considered on
4.4 Repayment of settlement amount on installments may be considered in case to case basis subject to payment of interest on OTS amount Modified to have more clarity
deserving cases. which shall be charged as follows :

 No interest – if OTS amount is paid within 60 days from the date of

sanction letter (excluding three days from the date of -do-
 free of interest if paid within 60 days from date of approval. . dispatch of the sanction letter)

 Simple interest @ prevailing sector rate on reducing

 beyond 60 days upto 240 days at present lending rate on simple interest balance basis from the date of sanction letter , if OTS -do-
basis from the date of sanction. amount is paid beyond 60 days and upto 240 days.
 Simple interest @ prevailing sector rate + 1% on reducing
 beyond 240 days at documented rate/present lending rate which ever is
balance basis – for OTS amount paid beyond 240 days and
lower plus 1%.
upto the date of entire payment. -do-

Provided, a down payment of 25% of the settlement amount in mandatory. Provided, a down payment of 20% of the settlement amount is mandatory
within 30 days from the date of sanction letter (excluding three days No change
from the date of dispatch of the sanction letter).

4.116 As far as possible proposal should provide for recovery of compromise

4.116 As far as possible proposal shall provide for recovery of compromise
amount in one lump sum or maximum within a period of 6-12 months.
amount in one lump sum or maximum within a period of 6-12 months.
However, the period may be extended upto 24 months depending upon the
However, the period may be extended upto 24 months depending upon
state of affairs of the borrower and subject to payment of interest indicating No change
the state of affairs of the borrower and subject to payment of interest
in para 4.4 above.
indicated in para 4.4 above

4.117 Post Dated Cheques may be obtained for the balance payment and
4.117 Post Dated Cheques may be obtained for the balance payment and
interest, if any.
interest, if any. No change

4.118 In case where One Time Settlement is considered based on the One Time
Settlement of other financial institutions sharing security on pari-pasu basis, 4.118 In case of consortium/co-financing of projects, sharing security on
pari-passu basis, OTS terms and conditions of the co-lenders may be For more clarity.
the terms & conditions of the lead institutions may be followed by THE
LENDER also. followed.

5. Other issues 5.75 In case of defaults on not adhering to installment deadlines penal 5.75 In case of defaults on not adhering to installment deadlines penal May be deleted, as interest is
interest @ 2% should be charged. interest @ 2% should be charged. being charged for any delay in
OTS payment.

5.76 Right of forfeiture in case of persistent defaults despite fixation of 5.76 Right of forfeiture in case of persistent defaults despite fixation of
installments and reinstatement of old out standings should be a pre- installments and reinstatement of old out standings should be a pre- No change
condition. condition.

6. Legal 6.75 A Compromise Deed should be documented as per the advice of Legal 6.75 A Compromise Deed shall be documented as per the advice of No change
Department for suit filed cases. Legal Department for suit filed cases.
Documentation

6.76 The Legal Department should ensure that all documents/ securities are 6.76 The Legal Department/F&A shall ensure that all documents/ For more clarity.
in force till the entire settlement dues are recovered. securities are in force till the entire settlement dues are recovered
unless agreed otherwise as per the terms of OTS sanctioned.

7. Determinants for THE LENDER should recover dues to the maximum extent. The determinants
given below may be considered:
arriving at
compromise 7.1 Status of the unit ( in operation/closed) 7.1 Status of the unit ( in operation/closed) No change
amount
7.2 If in operation, financial performance in the last three years. 7.2 If in operation, financial performance in the last three years.
No change

236
 7.3 Value of the security available including net worth of the borrowers/
guarantors.
7.3 Value of the security available including net worth of the borrowers/ No change
guarantors.

7.4 Valuation of assets with reference to cases where the overdues are more
than Rs. 2.00 Crores.
7.4 Valuation of assets:-

 Projects where principal outstanding is upto Rs. 25.00 lakhs : The Valuation of assets is an
borrower shall provide valuation of secured assets from CBDT important criteria for deciding the
approved Govt. Valuer. quantum of OTS amount.

 Projects where principal outstanding is above Rs. 25.00 lakhs and

upto Rs. 2.00 Crores : The borrower shall provide valuation of
secured assets from THE LENDER Empanelled CBDT Valuer.

 Projects where principal outstanding is above Rs. 2.00 Crores : The

valuation of secured assets shall be obtained by Technical Services
Deptt. of THE LENDER..

 The valuation report shall not be more than 6 months old.

 The inspection of the secured assets shall be carried out before

submitting the proposal for consideration of SAC.

8. Quantum of 8.1 Though all efforts should be made to recover the principal and the simple 8.1 The objective shall be to maximize recovery, keeping in view
interest to the extent covered in the gross profit, The following broad guidelines the outstanding amount as well the principal amount due from the
Settlement could be followed : Company. The amount to be recovered under OTS shall be decided
on merits of each case based on following factors :

 Value of securities (saleable/realizable value of physical

assets)
 Net worth of the personal/corporate guarantors after
considering deductible liabilities.
 The value of running business/unit in operation to strategic
investor, if any.
 Status of Project implementation.
 Project performance after commissioning.
 Working results and financial position of the Company.
 Legal status.
 Availability and quality of other collateral securities.
 Industry status.
 Market/product consideration and technology etc.

However, the following broad guidelines shall be followed :

A : Settlement amount : 100% Principal outstanding

75) For NPAs over 5years as on the cut- off date

A : Settlement amount : 100% Principal outstanding
&
Where the financial position of the company has not improved subsequently- No change
1) For NPAs over 5years as on the NPA date
100% of the Principal
&
Where the financial position of the company has not improved
subsequently-100% of the Principal
76) For NPAs over 3 years and less than 5 years as on the cut off date and if any
two of the following condition prevail
No change
2) For NPAs over 3 years and less than 5 years as on the NPA date and if
 Unit lying closed for the last 3years. any two of the following conditions prevail No change

 Suits pending for the last 3 years.

 Unit lying closed for the last 3years.

 The company has never achieved cash break even  Suits pending for the last 3 years.

 Project has remained unimplemented for the last 3 years

 The company project has never achieved cash break even
No change

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  Realizable value of the mortgaged assets as assessed by an independent  Project has remained unimplemented for the last 3 years
valuer is lower than the loan outstanding/ security not created.

 Realizable value of the mortgaged assets as assessed by an

independent valuer is lower than the loan outstanding/ security not
created.
100% of the principal
 Action initiated under SARFAESI Act and is pending for more
than 1 year.
B : Settlement amount : Amount below principal :
100% of the Principal outstanding.
1) For NPAs over 5 years as on the cut off date and, if any two of the following
condition prevail: B : Settlement amount : Amount below principal :

 Unit lying closed for more than 5years 1) ) For NPAs over 5 years as on the NPA date and, if any two of the
following condition prevail:
 Suits pending for more than 5 years
 Unit lying closed for more than 5years

 The company has never achieved cash break even  Suits pending for more than 5 years

 The company has remained unimplemented for more than 3 years

 The company project has never achieved cash break even

 Realizable value of the mortgaged assets as assessed by an independent  The company project has remained unimplemented for more than 3
valuer is lower than the loan outstanding/security not created. years No change

No change
 Realizable value of the mortgaged assets as assessed by
Government approved independent valuer is lower than the loan
outstanding.
Amount below the principal outstanding(maximum to the extent of the amount
already provided for/ written off in the books of THE LENDER)  In case security is not created. No change
 Action initiated under SARFAESI Act and is pending for 3
years.
No change
Amount below the principal outstanding(maximum to the extent of the
amount already provided for/ written off in the books of THE LENDER)
C : Settlement amount : 100% Principal + Simple Interest :
Amount below the principal outstanding but shall not be less than
1) For NPAs over 3 years and less than 5 years as on the cut off date- the saleable/realizable value of security and positive networth of
the personal/corporate guarantors after deductible liabilities.
100% of the Principal+ Simple Interest covered in the gross profit earned, if any No change
during the period of default or Simple Interest at present lending rate whichever
is lower. C : Settlement amount : 100% Principal + Simple Interest :

1) For NPAs over 3 years and less than 5 years.

2) For NPAs over 2 years but less than 3years as on the cut off date- 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
100% of the Principal+ Simple Interest covered in the gross profit earned during average rate of disbursement) whichever is lower.
the period of default or Simple Interest at present lending rate, whichever is No change
lower.
2) For NPAs over 2 years but less than 3years as on the cut off date-

100% of the Principal+ Simple Interest from the NPA Date at

3) Cases likely to become NPA at the end of the relevant previous year/ projects applicable present lending rate or document rate (weighted
under implementation which are delayed/ projects abandoned due to the reasons average rate of disbursement) whichever is lower.
beyond the control of the borrower-
3) Cases likely to become NPA at the end of the relevant previous year/
100% of the Principal+ Simple Interest at document rate or at present lending projects under implementation which are delayed/ projects abandoned due
rate, whichever is lower. to the reasons beyond the control of the borrower-

D : Settlement amount for specific Sectors : 100% of the Principal+ Simple Interest from the NPA Date at
applicable present lending rate or document rate (weighted
1) For projects in FOR WHICH SECTION LENDINGwhich are in commercial average rate of disbursement) whichever is lower.

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 demonstration category, the Settlement amount may be arrived that as follows:- D : Settlement amount for specific Sectors :

1) For projects in Biomass Briquetting/ Bio methenation/ Gasifier(Other

than Grid connected)/MSW and SPV which is not being financed by THE
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at LENDER since 2002-03 and for projects under FOR WHICH SECTION
document rate or at present lending rate, whichever is lower. LENDINGwhere principal outstanding is upto Rs. 35.00 lakhs, the
Settlement amount may be arrived at as follows:-
 For NPAs between 2-5 years old-100% of the Principal.
Deleted as no project in the
 For NPAs of 2 years or less-100% of the Principal+ Simple Interest at portfolio.
 For NPAs between 5-8 years old-75% of the Principal. document rate or at present lending rate, whichever is lower.
 For NPAs over 8 years old-50% ot the Principal.  For NPAs between 2-5 years old-75% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/ third  For NPAs above 5-8 years old-50% of the Principal outstanding.
party sale with dual power mode-50% of the Principal.
 For NPAs over 8 years old-25% of the Principal outstanding.

2) For Projects in Gasifier sector ( grid connected) meant for sale to SEB/
third party sale with dual power mode-50% of the Principal
Further in the cases where mortgaged/charged assets of the
borrower Company/guarantors have been sold through DRT/
SARFAESI Auction, the settlement for the balance dues may be
considered on the following basis :

Total dues as on NPA date.

Less amount recovered through SARFAESI/DRT
Auction.
Balance Due Settlement : 25% of the said Balance
dues.
Note : The borrower shall normally submit requisite documents
alongwith the proposal, however, in the event of non-submission
any document, if the amount proposed is equal to or above the
ceiling prescribed above, the same shall be considered and put-up
to SAC for its consideration.
9. Delegation Of 9.1 Settlement Advisory Committee (SAC) shall consist of following members:- 9.1 All the proposal for One Time Settlement of dues shall be
placed before the Settlement Advisory Committee (SAC) consisting
Power Director(Finance), Chairman. of the following:-
Director(Technical),Member
CGM(DCCS), Member  Director (Finance) |
CGM(PTS), Member
 Director(Technical) | (Senior Director will Chair the
GM(PMES), Member
Meeting)
DGM(MS)/ (FS), Member
 All HODs (Technical/F&A/Legal)
AGM(FS), Convenor
Sr Manager( Law), Member  Internal Auditors
Internal Auditor, Member  Legal Auditors
Legal Auditor, Member  Recovery Head, Convener.

(The decision of SAC shall be put up to the CMD)

10. Procedure 10.260 The borrower should come forward with a detailed settlement proposal 10.260 The borrower shall come forward with a detailed settlement No change
indicating amount of relief, justification for such application and ability to proposal indicating amount of relief, justification for such application
repay the compromised amount. and ability to repay the compromised amount.

Alongwith application, the borrower shall provide the following

documents :

 The valuation of mortgaged assets.

 Networth certificate from Chartered Accountants in
respect of all personal guarantors.
 The Audited balance sheet for the last three years at

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 the time of making application for settlement of
applicant Company as well as Corporate Guarantors,
if any.
 In case of shut down/Abandoned projects, where
balance sheets are not available because of no
operation in the Company, the borrower shall
provide copy of last audited balance sheet and a
certificate from CA stating the status of filing of last
audited Accounts in ROC.
 The details of generation from the project since
commissioning of the project till the time, the
proposal is made.
 The details of settlement, if any, sanctioned by other
FIs/Banks alongwith the copies of the sanction
letters.
 The source for payment of settlement amount.
 The time schedule for making payment of the OTS
amount proposed.
 Status of operation of the plant – Operational or
Shutdown, if shutdown since when.
10.261 The concerned dealing from Technical Department should examine the  Outstanding recoveries from sale of power.
proposal and arrive at a compromise proposal.

10.261 The concerned dealing official from Technical Department shall

examine the proposal. The proposal shall be forwarded to the
10.262 This proposal should be examined in details by the Settlement Advisory Convener of SAC alongwith the detailed background note No change
Committee. (covering proposal of the borrower, eligibility as per THE
LENDER Guidelines, Examination of the Proposal and
10.263 Recommendations of the Settlement Advisory Committee should be Observations) and the tentative Checklist (Appendix) for
placed before MD for his consideration. perusal and consideration by SAC.

10.264 MD is authorized to approve the One Time Settlement proposals strictly

as per the above stated policy. 10.262 The proposal should be examined in details by the Settlement
Advisory Committee.
10.265 Details of One Time Settlement approved by MD shall be submitted to
10.263 Recommendations of the Settlement Advisory Committee shall be
the Board for information
placed before MD CMD for consideration and approval.
10.266 All other One Time Settlement proposals having deviation from the
above policy shall be put up to the Board for approval. 10.264 MD CMD is authorized to approve the One Time Settlement No change
proposals strictly as per the above stated policy.