Objective

To encourage setting up of new hotels & guest houses to strengthen existing setups through expansion and modernization, leading to employment generation and regional development.

Purpose of Finance

The loan can be availed for

1. Setting up of new hotels & guest houses
2. Expansion of existing hotels and guest houses to enhance production capacity
3. Modernization of existing hotels & guest houses through replacement or upgradation of plant and machinery and other fixed assets

Eligibility

Eligible Activities:

1. Hotels & guest houses for renovation/ modernisation for existing as well as new
2. Setting up of new Hotels & guest houses

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Eligible Borrowers:

1. Individuals / Partnership firms
2. Private Limited Companies
3. Existing entreprenuers with satisfactory financial track record

Nature of Assistance

1. Term loan for creation of fixed assets including
2. Land and building
3. Plant and machinery
4. Tools, equipment, and infrastructure upgradation

Loan Amount

In order to cater to the needs of entrepreneurs for accelerating the eco tourism development in the UT of J & K and UT of Ladakh and with a view to reach to a majority of budding and existing entrepreneurs, the Corporation is extending lending facility in the range of ₹ 0.50 lakh to ₹ 2000.00 lakhs. The term lending limit is same in case the Corporation enters into a consortium arrangement with other banks in the State.

Debt Equity Ratio

Debt Equity Ratio shall be 65:35 normally. However. the sanctioning authority shall be competent to relax the requirement to allow Debt Equity Ratio up to 3:1 with minimum contribution of 25% of the project cost by the promoter.

Features

1. Affordable institutional finance
2. Support for new and existing entrepreneurs
3. Facilitation of industrial growth and local employment
4. Professional appraisal and monitoring support

Rates & Fees

Application fees:

The Corporation shall charge an application fee of ₹1000/- plus GST as cost of application which shall be adjustable against the processing fee to avoid non serious applicants. The application fee shall have to be deposited with the Corporation against the proper receipt at the time of issue of checklist of formalities and loan application form.

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Processing fees:

The Corporation shall charge processing fee as per the structure given here under:

*plus, GST as applicable

The processing fee shall have to be deposited with the Corporation at the time of submission of loan application form. The application fee deposited at the time of issue of application shall be adjustable against processing fee. In case the loan is not sanctioned in favour of the applicant(s) due to certain reasons,75% of the processing fee will be refunded.

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Up-Front Fee

No upfront fee shall be charged for Term loans up to ₹25.00 lakhs. Term loans beyond ₹25.00 lakhs & up to 100.00 lakhs shall attract upfront fee @ 0.375% of the Term loan sanctioned plus GST; Term loans beyond ₹100.00 lakhs shall attract an upfront fee of 0.75% of the term loan sanctioned plus GST. The upfront fee paid shall be non-refundable.

Interest Rate

The rate of interest will be charged by the Corporation equal to the State Bank of India Marginal Cost of Fund Base Lending Rate (MCLR) for 1 year tenor as revised from time to time for all lending cases.

Penalty

The Corporation shall be charging 2% as liquidity damage on the principal default and 2% penal interest on the interest default for the period and amount of default. A grace period of 10 days shall be allowed from the due date and in case the borrower fails to deposit the principal installment / Interest due within the grace period, liquidity damage / penal interest shall be charged from the due date of principal installment / interest respectively.

Billing of Principal/Interest

The Corporation shall raise interest bills at quarterly rests and interest shall be payable on 30th of June, 30th of Sept., 31st of Dec. and 31st of March every financial year. The billing date for principal amount shall be reckoned on the basis of the repayment schedule as per the documents executed and shall vary from case to case.

Disbursement of Loans

The Corporation shall be adopting “First Investment by Borrower approach” whereby the prospective borrower shall in first instance has to invest in full his contribution and unsecured loans, if any, forming part of the means of finance. The Corporation shall thereafter release its loan component on the basis of borrower’s requisition after proper verification of the funds invested in the project. No deviation shall be allowed without the prior approval of the competent authority. The first investment approach is to safe guard the interests of the Corporation and at the same time ensure timely implementation of the project. All the payments to plant and machinery suppliers shall be released by the Corporation. No advance payment made to the plant and machinery supplier shall be taken into account while calculating eligible disbursement until and unless the advance so made to the supplier has prior approval of the Corporation. All the disbursements shall be released only after being satisfied about the proper utilization of funds invested by the borrower under First Investment clause or the amounts released by the Corporation as its share.

Primary Security

The loan shall be granted against the mortgage of Land, Building, Plant and Machinery and other fixed assets. The necessary revenue documents in respect of land free from all encumbrances shall have to be deposited with the Corporation with charge of the Corporation registered with the concerned revenue and other designated authorities. In case of lease hold land, the lease deed valid for a period double the currency of loan will be entertained subject to the condition that the lease hold rights permit the lease holder to mortgage or transfer the lease hold rights to the Corporation giving unambiguous powers to it (JKDFC) to transfer or sell the leased land in case of default or foreclosure

Collateral Security

The Corporation shall be extending term loans against the collateral security in the form of Land, Building and Fixed deposits of scheduled banks. No loan facility will be granted by the Corporation without collateral security. The proposed percentage of collateral security of the loan sanctioned for different categories of borrowers is given below:

1. up to ₹50.00 lacs 100% of the loan amount
2. above Rs 50.00 lac to Rs 150.00 lac 75% of the loan amount with a minimum of ₹50.00 lac
3. above ₹150.00 lac to ₹2000.00 lac 50% of the loan amount with a minimum of ₹112.50 lac

However, in respect of the loan cases where the value of primary security is at least two times (two hundred percent) of the quantum of loan, the provision of further collateral security shall not be insisted upon.