OF PUNJAB SMALL INDUSTRIES CORPORATION

1. Aims & Objectives

- Fixed Investment to be created: Rs 2400 million

- Production Capacity to be generated: Rs 1800 million

- New Direct jobs: 4000

- New Indirect jobs: 4000

2. Target Group

• Existing and potential entrepreneurs who have the necessary talent and capabilities to run an industrial enterprise.
• Educated youth having technical/professional training with experience and possessing necessary business and managerial skills.
• Experienced Pakistani professionals returning from abroad.
• Potential female entrepreneurs.
• Rural areas for the establishment of rural/agro based industries.
• An incentive of low rate of markup for D.G. Khan, Bahawalpur Multan and Sargodha Regions.

3. Types of Projects To Be Financed

A) Project Size:
Industrial projects/enterprises with fixed investment up to Rs 5.000 million.

B) Priority Sectors:
The following sectors have been identified as preferable for financing:

• Service Industries
• Export Oriented Industries
• Import substitution industries
• I.T. Projects
• Agro-based/Agro-support industries/ Food Processing
• Handicrafts
• Women Enterprises

C) Working Capital Loans:
Loan disbursement for working capital shall not exceed 25 % of the total outlay of the Scheme and shall be restricted to:

• PSIC's former loanees who have successfully paid back their loans

  and/or

• The units established inside the Small Industries Estates

D) Prohibited / Negative list:
No loans will be approved for projects in mentioned in the negative/restricted list notified by the Government of the Punjab Annexed at:

4. Loan Parameters

Project Size:
Fixed investment up to Rs 5.000 million

Loan Limit:
Working Capital: --Maximum Rs 1.00 million
Fixed Investment:-- Maximum Rs 3.00 million
Minimum Rs 0.20 million
(average size: Rs 2.00 million)

Debt Equity Ratio: Maximum debt equity ratio will be:
For New Projects--: 60: 40.
For Existing Projects:-- 50:50

Mark-up: Simple Markup at Following Rates:
Lahore, Rawalpindi, Gujranwala & Faisalabad Regions

• 08 % for New Projects
• 09 % for BMR/Expansion
• 12 % for Working Capital loans.

D.G.Khan, Bahawalpur, Multan & Sargodha Regions

• 07 % for New Projects
• 08 % for BMR/Expansion
• 11 % for Working Capital loans.

Grace Period:
For Working Capital Loans: Two months from the date of disbursement.

For BMR/Expansion: Six months from the date of disbursement of the last installment or 1 year from the date of disbursement of the first installment whichever is earlier.

For New Projects: One year from the date of disbursement of the last installment or 1½ year (eighteen months) from the date of disbursement of the first installment whichever is earlier.

Repayment Period(Including Grace Period):

For Working Capital Loans: 1 year

For BMR/Expansion Loans: 5 years

For New Projects: 7 years

5. Security Of Loan

1. Registered mortgage of fixed assets of the project established/to be established.
2. Single Security of immovable assets equivalent to loan amount. This may be registered mortgage of immovable property (located in the same district) or FEBC, Bearer National Fund Bonds, etc. as are allowable to be deposited as collateral under Government/SBP regulations. Stocks and stores of the project may be hypothecated security against working capital loans

6. Cancellation of Loan

In case a loan-applicant fails to complete required formalities with respect to execution of legal documents within 1 (one) month of the date of sanction, the sanction will automatically stand cancelled. Loan so cancelled may not be restored.

7. Fines and Penalties

Late Penalty:
In case of late payment, a penalty @ 0.50 % per month (1% per month for Working Capital Loans) of defaulted amount of over-due installment(s) will be charged on the number of days of default.

Collector Charges:
In case a borrower fails to pay two consecutive installments he will be declared as defaulter. Collector's charges under Land Revenue Act as notified by BOR Punjab, will be charged from the borrower on declared defaulted amount, in addition to all outstanding dues.

1. Application Process

Loan Application:
To be submitted by the applicant on prescribed form (FORM: 1) along with necessary documents. Loan Application Forms are available in Urdu also which the applicant may use according to convenience.
Cost of the forms (non-refundable) would be Rs 200.00Applications will be received at the concerned PSIC District or Regional offices.

Project Feasibility:
To be submitted by applicant on prescribed format (FORM: 2)

Processing/Service Charges:
0.25 % (Non refundable) of the requested amount of loan to be charged at the time of receipt of application. However 50% of the deposited Processing/Service Charges will be refunded if the loan application is not approved by PSIC.

Ineligibility:
The applications of defaulters/delinquents of PSIC, Banks, or any other DFI will not be considered eligible for loan under these schemes.

PSIC's defaulters are defined below:

Age Limit:
Minimum 21 years of age on the date of submission of loan application.

2. Disbursement Of Loan

1. Completion Of Legal Documents

Standard (uniform) Mortgage Deed and Loan Agreement will be executed in all Regions. A committee as constituted for sanctioning of loans of over Rs 2.000 million will get the documents prepared from professional (legal) experts.

Competent Legal Advisors shall be engaged by PSIC at Regional Level to complete legal documentation i.e. mortgages and loan agreements. The execution of mortgage shall be carried out in the presence of the concerned Regional Director and two witnesses. The concerned Regional Director shall also execute the loan agreement on behalf of PSIC. If, for any unavoidable reason, the availability of RD is not possible, the Regional Director may in writing authorize/depute a responsible PSIC Officer of the concerned Regional Office, to complete/execute legal documentation.

2. Cost Of Land

The Regional Director/District Development Officer must get the cost of land verified from local Revenue Authorities. Both, Regional Directors and District Development Officer will be jointly and severally responsible for correctness of the cost of land.

3. Building Plan

The Regional Director must approve the building plan according to the requirements of the project, before the start of the construction of factory building. In case the building already exists, the covered area of the building will be included in the project report and evaluated accordingly. A copy of building plan duly signed by the loanee should be kept in safe record with the District Development Office/Regional Office.

Qualified Consulting Engineer duly registered with the Engineering Council shall be engaged by Regional Director to assess the building plan and the cost estimates. The fee of the engineer will be recovered from the borrower.

4. Machinery

Regional Director shall get the cost, quantity and specifications of machinery checked by Loan Disbursement Committee and if required, through a competent & qualified professional to be engaged by him. If the RD deems it necessary, he may associate an independent technical expert with the Committee. The fee of the consultant will be recovered from the borrower.

5. Inspection

The Regional Director would personally inspect the project before the disbursement, of last installment of loan.
The Director (C&M) PSIC Head Office or his authorized officer, not below the rank of Joint Director, shall inspect at least 10% of the completed projects.

6. Loan Account

The Director (C&M), with the approval of the Managing Director, make region-wise block allocations for loaning under the Scheme. The Regional Director PSIC will open a loan account in local branch of the approved bank, in which Director (FA&P) will accordingly remit the amount from the Head Office. The Managing Director on recommendation of the Director (FA&P) will approve the bank. The bank accounts at the Head Office shall be maintained jointly by Director (FA&P) and Director (C&M).

7. Supervision & Monitoring

Regional Office Level :

-The Regional Directors will maintain complete data/information about the operation of this scheme in their regions on prescribed format and submit monthly/periodical reports to Director (C&M).

-To check that the Scheme is being properly implemented and the projects are actually being established in accordance with the terms and conditions: -

The District Development Officer will monitor 100% projects.

The Regional Director will personally monitor 50% projects.

Head Office Level:

- The Director(C&M) will monitor the scheme at the Head Office level. The Directorate will maintain complete information/data of loaning operations and will monitor the progress of recoveries.

- The Director (C&M) will process and submit loan cases of over Rs 2.000 million and place the same before the Head Office Loan Sanctioning Committee.

- All instructions regarding any aspect of the Scheme, as may be considered necessary from time to time will be processed and routed through the Directorate of C & M.

- The Director (C&M) will inspect 20 % projects.

The Managing Director PSIC , in his discretion, may engage an outside agency to carry out (independent) random checking and evaluation in any Region.

Performance of the scheme shall be reviewed by the PSIC Board of Members on bi-annual basis in order to amend / modify its features if so required.

 

1-  General

Fixed Investment Loans

• The Loan for new project will be repaid in seven years including a one year grace period from the date of disbursement of the last installment or 1½ year (eighteen months) of the disbursement of the first installment, whichever is earlier.
• The BMR/Expansion Loan will be repaid in five years including a 6-months grace period from the date of disbursement of last installment or 1 year of the disbursement of the first installment whichever is earlier.
• The Principal will be recovered in equal quarter-yearly installments with simple mark up charged on diminishing balance.
• Notice for payment of installments as at FORM: 12 may be issued 15 days before the due date.
• Repayment received shall be adjusted towards outstanding penalty, markup and principal, in that order.

Working Capital Loans

• The Working Capital loan will be repaid in 01 year including a 2-month grace period from the date of disbursement.
• The Principal will be recovered in 5 bimonthly equal installments with the mark up charged on diminishing balance.
• Repayment received shall be adjusted towards outstanding penalty, markup and principal, in that order.

Repayment Schedule

The repayment schedule for all loans must be issued along with the release of the last installment.

Calculation Sheets

The Regional Head of Accounts must ensure that the Calculation sheets (on standard pattern) are prepared and kept up-to-date. Copies of calculation sheets duly signed by the Regional Director and the Regional Head of Accounts will be provided to respective borrowers and Director C&M every six months

2. Declaration Of Defaulter

If a borrower fails to repay the loan in accordance with the terms and condition of the agreement for six months (four months for working capital loans), i.e., defaults on two consecutive installments, the R. D. shall within 15 days initiate the process to declare the borrower as “defaulter'. Proceedings shall be instituted for recovery of the entire loan amount with due mark-up, penalties, etc. as arrears of Land Revenue.

If recovery is not effected within three months of declaration of defaulter, proceedings for auction of mortgaged assets must be initiated within the next 7 days.

3.  Recovery of Loans

CSSI-02 is a supervised credit scheme. The responsibility of proper evaluation of the project, disbursement of loan and recovery of outstanding dues rests with the concerned Regional Director and the DDO.

1. Introduction

The Punjab Small Industries Corporation (PSIC) has always been a pioneer in successfully catalyzing the development of the Small Scale Industrial Sector in the Punjab. Continuing in its tradition of being a change catalyst PSIC has now introduced its new Credit Scheme for Small Industries 2002 (CSSI-2002) with more emphasis on the hitherto neglected, areas like agriculture, handicrafts, women enterprises and the service sector industries.
This scheme envisages the disbursement of loans on soft terms, to facilitate rapid and widespread industrialization in the Small Scale Sector. Efforts are also underway, to arrange for provision of one window facility, for the establishment of projects in PSIC industrial estates.

2. Goals

• Employment generation through investment & industrialization
• To expand the entrepreneurial base
• To promote the Agricultural & Service Sectors
• To create an enabling environment for women entrepreneurs

3. Eligibility

• The applicant should not be less than 21 years of age at the time of applying for the loan.
• The applicant must be a resident of the area for at least last three years, from where he/she applies for a loan.
• At the time of filing an application for the loan, the applicant should not have any outstanding dues with another bank/financial institution.

4. Broad Parameters of Loan (For New Project)

Project Size:
Fixed investment up to Rs 5.000 million

Loan Limit:
Maximum Rs 3.00 million
Minimum Rs 0.20 million

Debt Equity Ratio:
Maximum debt equity ratio will be For New Projects: 60: 40.

Mark-up:
For Projects in Lahore, Rawalpindi, Gujranwala & Faisalabad Regions 08 %
For Projects in D.G.Khan, Bahawalpur, Multan & Sargodha Regions 07%

Grace Period:
One year from disbursement of the last installment or 1½ year (eighteen months) from disbursement of the first installment whichever is earlier.

Repayment Period: 07 years; (including the grace period)

Security Of Loan:

• Registered mortgage of fixed assets of the project established/to be established.
• Single security of immovable assets equivalent to loan amount. This may be registered mortgage of immovable property (located in the same district) or FEBC, Bearer National Fund Bonds, National Saving Certificates, etc. are allowable to be deposited as collateral under Government/SBP regulations.

Processing Fee:
0.25 % (Non refundable) of the requested amount of loan to be charged at the time of receipt of application. However 50% of the deposited processing/Service Charges will be refunded if the loan application is not approved by PSIC

1. Introduction

The Punjab Small Industries Corporation (PSIC) has always been a pioneer in successfully catalyzing the development of the Small Scale Industrial Sector in the Punjab. Continuing in its tradition of being a change catalyst PSIC has now introduced its new Credit Scheme for Small Industries 2002 (CSSI-2002) with more emphasis on the hitherto neglected, areas like agriculture, handicrafts, women enterprises and the service sector industries.
This scheme envisages the disbursement of loans on soft terms, to facilitate rapid and widespread industrialization in the Small Scale Sector. Efforts are also underway, to arrange for provision of one window facility, for the establishment of projects in PSIC industrial estates.

2. Goals

• Employment generation through investment & industrialization
• To expand the entrepreneurial base
• To promote the Agricultural & Service Sectors
• To create an enabling environment for women entrepreneurs

3. Eligibility

• The applicant should not be less than 21 years of age at the time of applying for the loan.
• The applicant must be a resident of the area for at least last three years, from where he/she applies for a loan.
• At the time of filing an application for the loan, the applicant should not have any outstanding dues with another bank/financial institution.

4. Broad Parameters of Loan (For New Project)

Project Size:
Fixed investment up to Rs 5.000 million

Loan Limit:
Maximum Rs 3.00 million
Minimum Rs 0.20 million

Debt Equity Ratio:
Maximum debt equity ratio will be For New Projects: 60: 40.

Mark-up:
For Projects in Lahore, Rawalpindi, Gujranwala & Faisalabad Regions 08 %
For Projects in D.G.Khan, Bahawalpur, Multan & Sargodha Regions 07%

Grace Period:
One year from disbursement of the last installment or 1½ year (eighteen months) from disbursement of the first installment whichever is earlier.

Repayment Period: 07 years; (including the grace period)

Security Of Loan:

• Registered mortgage of fixed assets of the project established/to be established.
• Single security of immovable assets equivalent to loan amount. This may be registered mortgage of immovable property (located in the same district) or FEBC, Bearer National Fund Bonds, National Saving Certificates, etc. are allowable to be deposited as collateral under Government/SBP regulations.

Processing Fee:
0.25 % (Non refundable) of the requested amount of loan to be charged at the time of receipt of application. However 50% of the deposited processing/Service Charges will be refunded if the loan application is not approved by PSIC

1. Introduction

The Punjab Small Industries Corporation (PSIC) has always been a pioneer in successfully catalyzing the development of the Small Scale Industrial Sector in the Punjab. Continuing in its tradition of being a change catalyst PSIC has now introduced its new Credit Scheme for Small Industries 2002 (CSSI-2002) with more emphasis on the hitherto neglected, areas like agriculture, handicrafts, women enterprises and the service sector industries.
This scheme envisages the disbursement of loans on soft terms, to facilitate rapid and widespread industrialization in the Small Scale Sector. Efforts are also underway, to arrange for provision of one window facility, for the establishment of projects in PSIC industrial estates.

2. Goals

• Employment generation through investment & industrialization
• To expand the entrepreneurial base
• To promote the Agricultural & Service Sectors
• To create an enabling environment for women entrepreneurs

3. Eligibility

• The applicant should not be less than 21 or more than 65 years of age at the time of applying for the loan.
• The applicant must be a resident for at least last three years of the area, from where he/she applies for a loan.
• At the time of filing for the loan, the applicant should not have any outstanding dues with another bank/financial institution.
• The applicant must not be an employee of a Government or a Semi Government organization. He/she may not be a regular student of a recognized educational institution.
• Loan disbursement for working capital shall not exceed 25 % of the total outlay of the Scheme and shall be restricted to:

  1) PSIC's former loanees who have successfully paid back their loans

  and/or

  2) The units established inside the Small Industries Estates

4. Broad Parameters of Loan (For New Project)

Project Size:
Fixed investment up to Rs 5.000 million

Loan Limit:
Maximum Rs 1.00 million

Debt Equity Ratio:
Maximum debt equity ratio will be For New Projects: 50:50.

Mark-up:
For Projects located in Lahore, Rawalpindi, Gujranwala & Faisalabad Regions 12 %
For Projects located in D.G.Khan, Bahawalpur, Multan & Sargodha Regions 11%

Grace Period: 02 months from the date of disbursement of the loan

Repayment Period: One (1) year; (including the grace period)

Security Of Loan:

• Registered mortgage of fixed assets of the project.
• Additional security equivalent to loan amount. This may be registered mortgage of immovable property (located in the same district) or FEBC, Bearer National Fund Bonds, National Scheme Saving Certificates, etc. as are allowable to be deposited as collateral under Government/SBP regulations. Stocks & stores of the project may be hypothecated for additional security against the working capital loans.

Processing Fee:
0.5 % of the requested loan amount will be deposited at the time of filing of loan application as nonrefundable fee.

1. Aims

• Easy access to credit dor craftmen/women producing handicrafts in punjab
• Poverty alleviation by creating employment opportunities
• Traget to provide at least 50% of loan amount to skilled women.

2. Eligible Projects

A) Project Size:Units or individuals with fixed investment upto Rs.0.200 million.

B) Priority Sectors

• Camel skin products inMultan.
• Blue pottery in Multan
• Block Pronters in karoor pacca and Mailsi.
• Lacquer coated wooden items in Jampur (D.G.khans)
• Khes, Lungi,Khusa making in Khushab , Sargodha , Mianwali Districts.
• Stitched Embroidery, in Hazro(District Attock)
• Gabba making in Muree.
• Wooden handicraft & wood Carving in Chiniot.
• Metal Craft of Lahore.
• Duree Weaving at Multan,Chistian and Ghakkar.
• Flassi manufacturing in D.G. Khan , Rajanpur.
• Embroided items of Cholistan.

3. Salient features

Loan Limit : Rs.40,000
Mark-up : @ 7%
Payment Period : 3-years including a grace period of 6 months
Security of loan : Equitable mortgage of fixed assets of the project established/to be established.Personal surety of two persons for loan up to Rs.15000
Target Group : Existing & new craftsmen/women
Project Size : Up to Rs. 0.200 Million

1. CNG Rickshaw

• Government of the Punjab for environmental considerations, has decided to phase out over 100000 existing 2-stroke rickshaws operating in Punjab and replace them with 4-stroke CNG Rickshaws. PSIC, in collabration with Transport Deptt has been entrusted to provide subsidized loans to rickshaw drivers/operators. This has created a big demand and a good opportunity to invest in production of 4-stroke CNG rickshaws. Which has created multiple job opprtunities in auto rickshwa sector.

2. CNG GREEN AUTO RICKSHAW LOAN SCHEME

1. Date of inception of the scheme = May, 2006

Date of inception of the scheme = May, 2006

A. SCOPE OF THE SCHEME:-

• To provide loans for CNG Rickshaws in cities of Punjab, under the Chief Minister’s Green Fund Programme

Objectives:-

1. Pollution fee transport facility for the public.
2. Poverty alleviation through creation of new jobs.

ELIGIBILITY:-

• One Rickshaw one person basis.
• Preference will be given to experienced rickshaw drivers who do not own rickshaw or want to replace their existing conventional rickshaws.
• Government employees and employees of autonomous/Semi autonomous bodies in BPS – 1 to BPS 16 are also eligible after obtaining NOC from the respective Department Head.

LOAN PARAMETERS:-

Sr.No	Parameter Name	Amount
i	Debt: Equity	75:25
ii	Price of Rickshaw	- Rs. 1,45,000/-(Including 15% GST & 1% Excise duty)
iii	Debt / Loan amount	Rs. 1,08,750/-
iv	Mark up	5.5 % (Flat)
v	Borrower’s Equity	Rs. 36,250/-
vi	Subsidy against Borrower’s Equity	Rs. 20,000/-
vii	Net payable by the borrower including insurance	Rs. 17,656/- (Say Rs. 18,000/-)
viii	Expenditure in connection with Passing	Rs. 4500/- to be borne by the borrower
ix	Re – payment period	3 –Year. In 36-equal monthly installments

LOAN SECURITY / COLLATERAL ARRANGEMENTS:-

This is arranged as under:-

1. Registration of Auto Rickshaw in Favor of PSIC.
2. Loan Agreement to include repayment of loan amount and any penalties.
3. Through insurance coverage of the borrower and rickshaw.
4. Guarantee arrangements / Personal Guarantees as per following Manners. Guarantee from Govt/Semi Govt Employees of BS – 8 and above. Businessman paying Tax for the last three years. Nazim(Union/District/Tehsil counsil) for two cases. Naib Nazim(UnionDistrict/Tehsil counsil) for one cases.

Progress since May, 2006 to September, 2007 is as under:-

Download Application Form here