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Installment of Principal & Interest Installment
Raising demand for Payments Repayment
Postponment, Reschedulement etc. Reschedulement
Revival of Sick Units Revival
In case of Persistent default Penalty
Change in constitution/Management Change in Mgmt.
Second Charge on Fixed Assets Second Charge
Default Review Committee Default Review
Standing Committee Standing Committee


In general the installments of interest & principal fall due for payment on half yearly basis. The months of payments of interest & principal are normally kept separate to avoid burden on the borrower.The due dates of payments are specified in the loan documents.

The payments made by the borrowers are appropriated in the following order: firstly towards other charges, followed by arrears of interest, and lastly towards principal. In case of multiple loan, the amount received shall be appropriated first towards loan overdues having lower rate of interest.

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The borrowers are expected to be well aware about the due dates for payment of instalments. However, to facilitate them. It is a usual practice of the corporation to issue demands for such payments well in advance.

In case due to postal delay or any other reason, the demand is not received by the borrowers, they should contact the concerned field office and deposit the amount well in time to avoid penal interest and other consequences of default.

It may be noted that non-receipt of demand notice cannot be taken as an excuse for default.

The payment of the dues can be made at the field office, or at head office but as far as possible the payment should be made at the concerned field office only.

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In case the party fails to pay the dues to the corporation in time, due to some genuine reason, the related facts & circumstances should be informed to the field office with full details.

Depending upon merits of the case, postponement of some particular dues, for some period, may be allowed; or the facility of the reschedulement of the entire outstanding may be granted.

However, grant of such facilities is solely at the discretion of the corporation. It is necessary that the borrower should remain in regular touch and continue to keep the field office informed of the progress and working of the concern at regular intervals.

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In case, assisted units turnout to be sick, and the promoters are very keen and ready to revive the unit, the corporation extends a helping hand for revival of such units - strictly on merits of each case, and if the corporation feels that the operations of such a unit can still be made viable.

The benefits, which may be passed on in such cases, generally include reschedulement of loan accounts, funding of overdue interest, grant of loan for balancing equipments, approval for change in the management, recommendation to other financial institutions, Bank,Govt. etc.

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Penal interest is charged in case of default. This interest is over and above the contracted rate.

In case the default becomes a chronic & persisting feature or the corporation feels that the dues are willfully not being paid, or the management is unable to run the units, the corporation is constrained to take painful decision of acquiring the assets U/S 29 of the SFC'S Act,1951 and dispose them off by auction/sale to recover the outstanding dues.

In case the sale proceeds of the assets are less as compared to the outstanding, the corporation is free to initiate legal proceeding to recover the balance amount from promoters/guarantors personally.

Recently the Government of Madhya Pradesh has also conferred the powers of Tahsildar on the Dy.General Managers of MPFC.

This has been done for the limited purpose of recovery of MPFC dues as arrears of land revenue to the extent of issuing Revenue Recovery Certificate (RRC) under the provisions of the M.P.Land Revenue Code, 1959 and the Madhya Pradesh Lok Dhan (Shodhya Rashiyon Ki Vasuli) Adhiniyam, 1987. RRC's are also being issued in favour of officers at Collectorate and Collectorate Officers are recovering the MPFC dues - as dues of Land Revenue, from the defaulting borrowers and their guarantors.

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It is one of the usual conditions for grant of loan that the change in the constitution and or management should not be done by the concern.

However if it becomes necessary in the interest of the project, a written request should be made to the concerned field office and the desired change may be affected only if the approval of the request is granted in writing.

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On the request of the regular borrowers, the corporation usually permits second charge on fixed assets in favor of the Bankers.

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Defaulting borrowers are reviewed by the corporation both at field offices and at Head Office.

Default review committee (DRC) at Zonal level considers the cases for reschedulement of loan account, granting of rebate, issue of legal notice, take over of the unit, change in management, disposal of units, etc.

The zonal level DRC considers cases having sanction amount less than Rs. 20.00 lacs, while those having a higher sanction amount are dealt with by H.O.

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Cases of disposal of taken over units where assistance originally sanctioned is above Rs. 5.00 lacs, are considered by the standing committee(SC), constituted in the Head Office of the corporation.

The units are disposed off after giving news papers advertisement, calling offers from intending purchasers and subsequent negotiations.

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Designed, Developed & Maintained By
Syed Saad Saleh & Shailesh Sharma
Last Modified : 17th, February 1999.
Errors and Omissions Excepted.