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OBJECTIVE To meet the working capital requirements of the Service Sector viz. Traders.
ELIGIBILITY All Enterprises engaged in trading with original investments in equipment as defined under MSMED Act, 2006 -
Satisfactory experience of business and having financial statements of at least two preceding financial years.
  1. Proprietorship concern;
  2. Partnership firm;
  3. Private Limited company; and
  4. Society.
Purpose Financing of stock and book debts
[not older than four months]
EXTENT OF FINANCE: Minimum –Rs.10 lakh
Maximum – Rs.500 lakh

In case working capital limit is sanctioned by way of hypothecation of stocks and book debts, the CC (BD) limit will not exceed 50% of the total limit sanctioned.

In case the working capital limit is sanctioned only against hypothecation of book debts then the maximum limit shall be Rs.100 Lakh only (Drawing against advance payment to blue chip companies not more than 50% of book debt limit).
METHOD OF ASSESSMENT Need based combined limit (stocks and book debts) for working capital requirement be fixed as per Nayak Committee recommendations i.e. 20% of sales turn over.

-The projected turnover / receipts from the activity of the units should be assessed objectively. Generally the projections accepted should not be higher than 30% Compounded Annual Growth Rate (CAGR) unless there is a past track record of higher CAGR.

-In case of seasonal business, higher / lower limits for busy / slack season can be set up keeping in view the past trend.
MARGIN: Against Stocks & Book Debts- 25%
SECURITY i) Primary Security- Hypothecation of stocks and book debts (not older than 4 months) of the business financed by the bank.

ii) Collateral Security- Minimum 110% (Market Value) of the limit proposed in the form of immovable property by way of EQM/registered mortgage either of borrower or guarantor and/ or other liquid security acceptable to the Bank and duly charged to the bank.

- Valuation and title verification of assets by Bank’s approved valuer /advocate as per extant guideline.

  • Fresh valuation of immovable property to be obtained once in three years.
  • In case of depletion in market value of security borrower has option to top up the security to avail benefit of lower interest.
  • In case of depletion in market value of security (at the time of revaluation) below the minimum prescribed level of 110% applicable ROI to be charged (no interest benefit to be extended).
- In case of paper securities noting of Bank’s pledge charge with the respective issuing authority as per extant guidelines.
RATE OF INTEREST Rate of interest is to be linked with market value of collateral security as under:-
Market value of collateral security of the aggregate limits:-
Market value of security (%) Proposed rate of interest (at present)
110% - 149% BR + 2.50% i.e. 12.70% p.a
150% - 175% BR + 2.25% i.e. 12.45% p.a
More than > 175% BR + 2.00% i.e. 12.20% p.a.
Processing Fees and Documentation Charges Processing fees, documentation and other charges shall be levied as per extant guidelines.
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