Case Study- Takeover of NPA Account from ARC Company
Here, we are sharing case study of one of our client located in Mumbai. Client was running a business of manufacturing high class TMT steel bars of 550D. Business started in year 2011 and they were really doing the good turnover of Rs.210 cr in year 2015 with good margins. They also availed loan facilities from SBI(State Bank of India) to the tune of Rs.18.50 cr which increases year on year to Rs.45 cr. This loan was secured by the way of their Residential house property, factory land & building and other current assets of company. Click Here to fund your ARC Loan Account In the year of 2016-2017, China started a dumping price war in India and breaks the price from Rs.50 to Rs.30. After this china raw material pressure, Indian government impose anti- dumping duty for five years, which is now extended for another five years. But due to this price war of almost two years, business of our client immensely affected, turnover crashed hugely, which swaps away margins and due to this client was unable to service the bank loan and which ultimately slips in to NPA Account or their loans turns in to NPA account. And bank increases the outstanding amount of our client to Rs.55 cr including interest & other charges. After government impose of anti –dumping duty, business of client again started rising from 2019 and by the end of year 2021, they regain their sales to Rs.125 cr. And in the meantime, in year 2020 one of the premium ARC(Asset Reconstruction Company) take their account directly from the bank at some reduced prices. So, ARC company approached our client for repayment of this loan at some reduced prices. Therefore a new loan agreement is signed between ARC & our client. Hence loan amount now reduced, this benefits our client but, again as per RBI guidelines account in ARC company is still considered NPA. So client was unable to transfer his loan to some regular bank as no bank can takeover a loan from ARC Company. Client wanted to do so because he was badly required working capital for his business as previously he managed the working capital for business from his family personal savings or assets and also wanted to came out this NPA Status, which unable them to excel in business. After lots of fail trials with lot of banks & NBFC’s, client approached us with intention to transfer his NPA Account & requirement of working capital . We at Fund Source India, analysed client business & terms with ARC company and ensure the client that, we can do this takeover of NPA Account and additionally able to arrange some working capital as business required some funds to be infused at that time. We introduced one of our NPA finance company and put up all case facts in such a way that they immediately shows interest in the proposal. We arrange a one to one meeting of both parties and terms & conditions decided between both and after due diligence of around 45 days, this new loan was disbursed. Benefits of this new loan to client :-: NPA Account is closed directly by new company through direct RTGSSecurity documents transferred directly to this new NPA Finance CompanyA new repayment for 5 years is given to clientMoratorium of six months was also givenFreedom of liquidation of assets towards repayment( if required)A new repayment track is createdUpdate & improvement in CIBIL ScoreNow client can easily move to other bank for further funding options
Builder Finance or Builder Funding in India – Fund Source
Builder Funding or Builder Finance Builder funding is specialized funding for builders & developers who are developing a residential or commercial construction project, and funds are required to complete the ongoing construction project. This funding helps the builders to focus on the construction part only, which ensures the timely completion & delivery of the project within its timelines without worrying about the finances. This funding can be utilized in various parts of the project, such as: Purchasing construction material Clearing the bills of vendors & contractors To meet admin expenses like salaries & wages To invest money in the marketing that ensures fast selling of the project In takeover an existing ongoing loan with additional funds Requirements for Builder Finance All the areas which has potential buyers Residential Project & Commercial project only Client/company must deliver some projects New developers also welcome with some conditions (kindly contact team) Standard or NPA project is welcome Profitable project revenues required Clean revenues with no fund diversion Other Terms & Conditions For NPA Clients, payments can be made directly to the previous banker Loan Amount: As required for completion of project Tenor: As per delivery of project Repayment: As per sales share Locations: all India Private limited companies or limited companies are preferred Construction loan for builders in India We offer construction loans for builders & developers to construct & develop their ongoing or newly launched construction projects, such as residential apartments or commercial office units. These construction loans help the builders to complete their residential or commercial projects in the promised time to the buyers, which ensures good profitability and market reputation. Some key Features Available in all major cities across India For residential as well as commercial projects Can be taken for ongoing as well as early-stage projects Covers all construction-related expenses like salaries, wages, raw material, contractor payment, and sales & marketing It can be taken on SPV also Repayment as per the sale of units No additional collateral is required
What is One Time Settlement (OTS)
What is One Time Settlement? One Time Settlement (OTS) is an effective tool used by banks to reduce NPAs from their books. This scheme allows borrowers to settle their loans by paying a reduced amount, typically within a short timeframe (3 to 6 months). For borrowers facing financial stress, OTS can provide much-needed relief by waiving a significant portion of their outstanding dues. Why Do Banks Offer OTS? Manage NPAs: Banks use OTS to clean up their balance sheets and reduce the number of overdue accounts. Financial Relief for Borrowers: By offering waivers on interest and legal charges, OTS helps borrowers repay loans at a reduced amount. Benefits of OTS Substantial Waivers: Borrowers can receive waivers of 20-50% on the total outstanding loan. Debt Settlement: Enables borrowers to clear their dues completely within a stipulated time. Stress Relief: Ideal for borrowers facing financial constraints, as it simplifies the repayment process. Who Can Apply for OTS? Borrowers whose loans are categorized as NPAs (due to missed payments exceeding three months) can apply for OTS, provided they are not marked as willful defaulters. Step-by-Step Process to Apply for OTS 1. Draft an Application Start by drafting an OTS application addressed to your bank. In this application: Mention a proposed repayment amount. Provide valid reasons for the settlement. Specify the timeframe within which you can repay the agreed amount. 2. Make Initial Payment Deposit 5-10% of the proposed settlement amount in a no-lien account. This amount will either be adjusted in the final settlement or kept secure if the application isn’t approved. 3. Approval Process Once your application is submitted, the bank evaluates it based on: Value of collateral or assets. Age of the account. Sources of funds for repayment. 4. Final Payment Pay 25% of the settlement amount upon approval. Repay the remaining balance within 90 to 180 days as per the bank’s agreed terms. Conditions for OTS Borrowers can repay using their own funds or obtain financing from third parties. Some lenders may require collateral worth at least twice the loan amount. OTS financing is available across India, subject to lender policies.
