ofeterer ao A” Union Bank Of India Credit Policy & MSME Department, Central Office Union Bank Bhavan, 239, Vidhan Bhavan Marg, Nariman Point, Mumbai 400021 Instruction Circular No: 646- JOG 11 November 2016 ‘TO ALL BRANCHES/ OFFICES MANAGEMENT OF CREDIT PORTFOLIO - UNION START-UP SCHEME + In order to stimulate sustainable economic growth and generate large scale employment, Government of India has launched a flagship initiative known as “Start-up india” and Published a Gazette Notification on 17.02.2016 (Copy enclosed). The initiative is to provide financial support for innovat n, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. 2. The aforesaid initiative of Government of India aims at fostering entrepreneurship and Promoting innovation by creating an ecosystem that is conducive for the growth of Start ups. Further, “Start-up” certification will be issued by Government Authority based on defined norms. Hence, Bank has introduced a new NSME Scheme, Union Start-up to Provide a bankable platform for business units identified as Start-up and to meet their need based business requirement. 3. The attractive features of Union Start-up Scheme are detailed as under: Working Capital & Term Loan Finance to eligible Start-ups upto Rs.5.00crore. Provision for financing soft cost in project cost. Flat Margin of 20% for Working Capital and Term Loan Finance. 1% concession over applicable RO! subject to minimum appropriate MCLR, NIL Processing Charges /Inspection Charges/Documentation Charges Collateral security not to be insisted upon. Repayment period of TL upto 120 months including moratorium period upto 36 months eo pange 4s and when Entity cease to be a start-up i.e. within a maximum period of 5 years as per Start-up India Scheme, the concessions in interest rate/ service charges allowed under the scheme will be reviewed by the Bank on case to case basis. The guidelines are effective from the date of issuance of this circular, The details of Union Start-up Scheme are enclosed as Annexure | Field functionaries are requested to effectively market the aforesaid scheme and also ensure good publicity so as to garner maximum quality business. - (D.\C. Chauhan) General Manager oe.() vvion Ban Union Start-up Scheme Annexure-1 UNION START-UP SCHEME Particul Details Scope The scheme will be operational Pan-india. 2. | Eligibility Ja. The Unit must be eligible and certified as “Start-up” by the | concerned Government Authority as per Start-up India scheme launched by Government of india (Gol). b, The constitution of the Unit should be Private Limited | Company, Registered Partnership and Limited Liability Partnership or as acceptable for classification as “Start-up” | under Start-up India Scheme of Gol. |c. All the statutory approvals / NOCs from the respective Department etc should be in place as per the progress of the project/ operational stage of the Unit. d. Credit Rating of the New Borrowers should not be below the Hurdle Rate as per Loan Policy. e. The Unit to avail loan under sole banking arrangement (excluding retail loans). f. Any deviation in the eligibility criteria under the scheme shall be subject to prevalent / latest Loan Policy. 3. | Purpose To Finance for innovation, development, deployment oF | | commercialization of new product, processes or services driven | by technology or intellectual property as per Start-up India i Scheme, 4. | Nature of | Term Loan and 7 or Working capital (Fund Based and Non-Fund Facilities Based) 5. | Quantum of | Minimum: Rs.0.10crore | Finance Maximum: Rs.5.00crore 6.) Assessment a. Assessment is to be made as per the lending methods indicated in the Loan Policy. b. The assessment of loan to New Projects will be based on projections as per norms. ¢. Composite loan including term loan and working capital limit may be considered at the time of initial sanction. d. Upper ceiling for considering soft cost in total project cost for assessment of Term Loan: | i. Provision for interest during construction may be included in Project Cost as per the accepted construction period. | fi, Provision for contingencies not exceeding 10% of project cost. ‘Margin Money for working capital (MMWC) not exceeding 10% of project cost. iv. Provision for expected losses Post-DCCO not exceeding 10% of project cost. | v. Total Soft cost including i, fi, iii & iv above not to exceed 25% of project cost. Page 2 of 4(G) tonion Bap Union Start-up Scheme [S| Particular Details | No. i 7. ‘Margin 20% (Working capital as well as Term Loan) 8. _| Interest rate 1% less than the applicable ROI subject to minimum appropriate | CLR. 9. | Processing Nit Charges 10. | inspection | Nil Charges | 11. | Documentation | Nit He Peete Charges | | 72. [Other service | As apaticable | charges | Credit rating | As per extant guidelines. norms | terms of Credit Guarantee Scheme. ) 15. | Repayment Working Capital: 12 months subject to renewal as per extant Security Primary: All tangible assets created out of Bank's finance shall | be charged in favor of Bank by way of hypothecation / mortgage ete. Collateral: May not be insisted upon. Guarantee: + Personal guarantee of promoter directors, partners of the firm/company having sufficient means and of all mortgagors of collateral security, if any. If Credit Guarantee cover from approved institution is available, no third party guarantee shall be taken (or as per guidelines. (The Working capital limit may be kept in abeyance pending completion of project or earlier as the case may be.) Term Loan: Maximum Door to Door repayment shall be 10 years including moratorium period not exceeding 36 months. | Repayment can be in monthly / quarterly installments. Interest | shalt be recovered separately. | However, RLCC-1 (Headed by Regional Head} and above only may Delegation Delegation a5 per_polcy “on delegation “OF Teaning powers. | exercise delegation under the scheme. Due diligence | Due diligence to be carried out as per extant guidelines of the bank. | All sanctions to be reported to the Controlling Office in M-27 on _| monthly basis. _ Page 3 of 4(Q) union Bank Union Start-up Scheme [S.” | Particular Details | No, | eS 19. | Insurance Comprehensive insurance of all the securities with Bank's clause is to be taken as per norms. | 20. | Scheme codes [To be communicated separately by the Bank. 21. | Credit Credit Guarantee from “approved institutions 1.6. CGTMSE, | Guarantee CGFMU, CGSSI and CEGSSC wherever available must be obtained without any exception, Pr 22. | Relaxation Relaxation may be permitted by next higher authority upto ZLCC and respective Credit Approval Committees at Central Office thereafter in following cases: |a. Breach in upper ceiling of 25% for soft cost in cost of project. |b. Reduction in margin requirement. | esides above, the authority for permitting deviation will be | | same as permitted in Loan Policy, Any other deviation from the | defined scheme is to be approved by CAC-II and above.) 23. [Other Terms |- The Start-up certification issued by the Government Authority and Conditions must be kept on record, ~ Branches to ensure proper verification of mandatory certificate issued by GOI and other necessary statutory approvals / NOCs from department's concerned to arrive at eligibitity, ~ Sanctioning Authority to explore possibility of creating charge on future cash inflows by way of escrow TRA mechanism. ~ Initial outlay of Rs.200.00crore is allocated under the scheme, which may be enhanced with the permission of the Executive Director overseeing CP&MSME Vertical. - Finance to Start-ups under the scheme will be controlled by Regional Office/s without the involvement of SARAL. (The aforesaid proposals will be outside the scope of SARAL.) ~ Other applicable Terms & Conditions as per extant guidelines of Bank are to be complied with. Page 4 of 4REGD. NO. D.L.-33004°99 The Gazette of Sudia EXTRAORDINARY rT lag 3—39-a0e (i) PART Il—-Scotion 3—Sub-seetion () ‘aferare 8 weer PUBLISHED BY AUTHORITY 113] 3g fart, qeatfrart, wratt 18, 2016/7 29, 1937 No.113} NEW DELHI, THURSDAY, FEBRUARY 18, 2016/MAGHA 29, 1937 arfirer atte seit dart (ted st opt ata Pra) afer wf Reel, 17 wea, 2016 ATR. 180() ara Fea arr tat F eras & fer ae ae sumer STH See Reider dear sea At sirwor ft we 8) ara wor & Paes aren arr se wats & fam we sae qe fe re Bt aga fee me Senet TET aT 2 fant er a Rreargare ‘werden? rar ae %) Sek feettrcndstteren ft fae a vie at ae, a) wit feat fagdia ae 8 car acta (etary) 25 wits Safire aT e, a) ag aftedtecn, seni ar afer deer arenes ae send}, sfrareit azar arat & faa, ard a afiretiace & ade arf ax cer a; vee 2 a aftacy art Balt omaare % fats ar oak qahiate avery & sare ae feet ear FT verdat agi aT aT, sae fee args ear Pe a Pret serdar ae are reg wee fin atecastarenlt wa TE Sr Breer a ToT a eT aR te Per er amas & 2) sty afta, shehtite fife wa ais Foor, 2m) Feara ea stehiioe ara af ate, ate a) Sasitenfin faa wate 833 GI2016 a2 THE GAZETTE _OF INDIA: EXTRAORDINARY [Paxr See. 36) Seer: 41. ag deere area feeriecortattacor Fh Pate a aie ak ge grey oe ara eh Pare ad A seer arta 25 aire wre e afte eae Ferd FBT ae aT TT 2, sears or orf @ - are fist aa fates seit Geet afattes, 2013 F war afterite), wear gt aritarét wat (ardtant afta, 1992 3 ave 89% aaa cite) aT Fae Bear aererht (RES eaaT arararft afta, 2002 % aria) 3. arttare ar ond, dent afta, 2013 8 afoot fr erga Hy 4, Rech sears St afiertiaan, steht on alfa aver snenta ae seret, aha a Fava ae, azqprita ay anfinefiace sete Habe ara ora 8, aR gerer aver Peat at Rehr ert oe sr afte aT a: 9) ep a seme aT Rat aT aT srAT 2a) agent er 8 ere fie ame stag sere, dear ar atten, ofr ar ard ab arg ga TS asain a wees a sara Feist ear aoc sea eh ce afer aber fara TERT 28) sears ar Sart a afin ra eradicate aft, ara 2a) ceparae seer ar Bat ar afer aera a) Sere ar dara sfirard oh ange ar ard wary ade He goa denis aft ah ar are fae a. 8, serdar a 8 aero Sah firey, Staite AR cs eevee Pare stare Cada are A Bf err at Refers eer Shh Spee eae aero ares eT aa ST (@) sree 8 Beh arte senha B earfta fet sora ober Ag een Pare fae aa H srqet (eee oy af soph ae By aT (2) Paeft eibec ar ewe ot Ferrite (aera are 8, atten at sree ae fy et PAPE rar wre a Bre cere ar AE cro ea ae Be aT a aT (1) reer acare aren rer we ft ae atta AAS ek en rer arr PAPA saeiten (rar afters opie Hah Hy; aT (@) Rf rer tetas el Sf erator aaah ot arta afte we Rate TE Sige ah, Barc SPH F 20 via ar ea fire i Patra ar oa ST armas fra eT Br efter etn oA ce ede tre ere Be Fare rarer at A Ra Bt ee ante ae wee th ag faa awe aT (2) aver err eh ree ere wr eee at reer arc a eat Re rae sort aie at (9) armen eee at aber eh at det H reba Be aratere ener afer Ha ar wer aie sranfera Far ar We[sm lars 3()] Re ATI + STAT 3 hehe ft oe atania fear ti atarea cate qe GA oe arora at area Ba A deere ose We RHA 81h Te ee Tea are fear ores arvere gt a oe wero a area awa ATTA area are er reas af are Ht are Be ar re eT aT & fe ag ATTA, Zea Pea sere Fr a area Beat areas Sea aT ehh wea aA are oes ye, A aes ME ave aT Tt or aT serdarn at zea aT 50 ter de, AFR TE 25,000 Be ETE ET ag afiepe, ceaire ores # sara ft arfts 3 ary afl fer. #. 5(91)/2015-8. 1 voadta ah, dyer ae MINISTRY OF COMMERCE AND INDUSTRY (Department of Industrial Poli NOTIFICATION New Delhi, the 17* February, 2016 GSR. 180(E)—The Government of India has announced ‘Startup India’ initiative for creating a conducive environment for startups in India. The various Ministries of the Government of India have initiated a number of activities for the purpose. To bring uniformity in the identified enterprises. an entity shall be considered as a ‘starnup'~ and Promotion) a) Upto five years from the date of its incorporation/registration, ) If its tumover for any of the financial years has not exceeded Rupees 25 crore, and ©) Iris working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property; Provided that any such entity formed by splitting up or reconstmction of a business already in existence shall not be considered a ‘startup’, Provided farther that in order to obtain tax benefits a startup so identified under the above definition shall be required to obtain a certificate of an eligible business from the Inter-Ministeriel Board of Certification consisting of. a) Joint Secretary, Depertment of Industrial Policy and Promotion b)_ Representative of Department of Science and Technology, and ©) Representative of Department of Biotechnology Explanation: 1. An entity shall cease to be a startup on completion of five years from the date of its incorporation‘registration or if its tumover for any previous year exceeds Rupees 25 crore. 2. Entity means a private limited company (as defined in the Companies Act, 2013), or a registered partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2002), 3, Tumover is as defined under the Companies Act, 2013. 4. An entity is considered to be working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property if it aims to develop and commercialize: a, A new produet or service or process, or b. A significantly improved existing product or service or process, that will create or add value for customers or workflowTHE GAZETTE OF INDIA: EXTRAORDINARY [Pant Sec. 3(0] Provided that the mere act of developing: 1, products or services or processes which do not have potential for commercialization, or b. undifferentiated products or services or processes, or 6. products or services or processes with no or limited incremental value for customers ot workflow ‘would not be covered under this definition. The process of recognition as a ‘startup’ shal] be through mobile appiportal of the Department of Industrial Policy and Promotion. Startups will be required to submit a simple application with any of following documents: ) @ recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator established in a post. ‘graduate college in India; or 'b) a letter of support by any incubator which is funded (in relation to the project) from Government of India or any State Government as part of any specified scheme to promote innovation; or ©) @ recommendation (with regard to immovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator recognized by Government of India; oF @) a letter of funding of not less than 20 per cont in equity by any Incubation Fund/Ange! Fund/Private Equity Fund/Accelerator/Angel Network duly registered with Securities and Exchange Board of India that endorses innovative nature of the business. Department of Industrial Policy and Promotion may include any such fond in a negative list for such reasons as it may deem fit; or ©) a letter of funding by Government of India or any State Goverment as part of any specified scheme to promote innovation; or 1) @ patent filed and published in the Joumal by the Indian Patent Office in arcas affiliated with ‘the nature of business being promoted. Department of Industrial Policy and Promotion may, until such mobile app/portal is launcled make alternative arrangement of recognizing a ‘startup’. Once such application with relevant document is uploaded a real-time recognition number will be issued t the startup. If on subsequent verification, such recognition is found to be obtained without uploading the document or uploading any other document of a forged document, the concemed applicant shall be liabie to a fine which shall be fifty per cent of paid up capital of the startup but shall not be Jess than Rupees 25,000. ‘This notifiction shall come into force on the date of its publication in the Official Gazete [P. No, 5(91)/2015-BE, T] RAVNEET KAUR, Jt. Secy. ‘Upland by Dex of Patig we Gavename a Tas Tr, Rng Rand Nays New BE TTOORE and Pubiste ty the Contr o Pabains, DsiheHHO8S!