SME Finance for CAs upto Rs 25 Lakhs by SBI

The following is the circular from SBI which gives terms and conditions for Loans to CAs, without any collateral and for working capital requirements

The Institute of Chartered Accountants of India (ICAI) is a statutory body established by an Act of Parliament, viz. The Chartered Accountants Act, 1949 (Act No. XXXVIII of 1949) for regulating the profession of Chartered Accountancy in the country. The Institute, functions under the administrative control of the Ministry of Corporate Affairs, Government of India. The ICAI is the second largest professional body of Chartered Accountants in the world, with a strong tradition of service to the Indian economy in public interest. In order to capture this important segment and to cater to the credit requirements of Chartered Accountants a new product, “SME Finance For CAs Under Contactless Lending Platform” has been rolled out.

2. Salient features of the product are furnished below:

Extend finance to CAs registered with ICAI.
Minimum loan: Rs.2.00 lakhs, Max. loan Rs. 100 lacs
Simple assessment of limit based on Income Tax Return
Nil collateral security.
No prepayment penalty.
Competitive rate of interest linked to EBLR.
Covered under CGTMSE.
Loan will be available through CLP platform.

3. The loan facility to CAs will be introduced in Metro and Urban centers including State Capital/ Tier-I cities.

4. The following are product codes for Overdraft and Term Loan facilities under loan to CAs:

Product Code	Product Description	Facility	Segment
6501-4020	EB-MSME-OD-SME FIN CA	Overdraft	MSME
6400-4093	EB-MSME-TL-SME FIN CA	Term Loan	MSME

We attach the following annexures: –

Annexure-I: Detailed features of the product.
Annexure-II: Scoring Model
Annexure III: Loan Application Form.
Annexure-IV: Appraisal Format.
Annexure-V: Standard Operating Procedure (SOP) for the Product

5. Appraisal formats for the loan product are being developed in LOS/ LLMS. Hence, till such time rolled out in LLMS branches are permitted to process the proposal outside LOS/ LLMS. Please advise the operating units and branches under your control to book maximum business under the product.

Chief General Manager (SME & SCF)

Annexure-I

Salient features of SME Finance For CAs Under CLP

Sr.	Parameters	Features
a.	Target Group & Eligibility	Member Chartered Accountants (CAs) / Proprietorship / Partnership / or in any other form registered with the Institute of Chartered Accountants of India and currently under practice. Eligibility: Minimum Age: 25 Years, Maximum Age: 65 yearsCA must have Certificate of Membership (CoM)/ Certificate of Practice (CoP) issued by ICAI. CoM/ CoP should be at least 5 years old.Minimum ITR – ITR for past 3 years should be available.The applicant must obtain a minimum score of 50% as per score card under the scheme.Applicant must be registered in UDYAM portal as MSME.Applicants with CIBIL score below 650 will be ineligible.
b.	Purpose	Overdraft: For payment of salaries to employees/ Overheads/ Expenses pertaining to office. Term Loan: Purchase of Office Equipments, Computers, Fixtures Fixed assets/ Renovating office premises.For Construction of office premises on self-owned land/ firm land/ Promoter’s land.For acquisition of ready built new office premises on ownership basis.
c.	Nature of Facility	Overdraft, Term Loan.
d.	Quantum of loan	Overdraft: Min: Rs. 2 Lakhs; Max. Rs.25 Lakhs.Term Loan: Min. Rs.2 Lakhs; Max: (i) Metros: Delhi, Mumbai, Chennai, Kolkata, Ahmedabad, Bengaluru: Rs. 100 Lakhs (ii) Other Centres (State Capital/ Tier-I cities) : Max. Rs.75 Lakhs.
	Assessment	Term Loan: 75% of the project cost. Overdraft: 25% of Gross Receipts of the Firm/ CA. Max. Rs.25 Lakhs. [Note: Gross receipts mean total Professional and Other Fee received by a firm or CA. Gross receipts can be verified from GST returns (as GST is compulsory for > Rs.20 lakhs receipts). Gross receipts can also be verified from Audited of Certified Financials. In case of non-audited financials or Non-GST registered firm, receipts can be verified from Income Tax Return (as per Income Tax Act, professional have to show income higher of the following as presumptive income u/s 44 ADA: 50% of the total receipts from the profession.] Gross receipts can also be verified by credit summations in the account. (Branches are instructed to arrive to the income/ receipts as per Form 26AS for assessment of OD limit.)

Sr.	Parameters	Features
e.	CRA/ CUE	Not applicable.
f.	Margin	Term Loan: 25%, Overdraft: Nil.
g.	Pricing	Overdraft: EBLR + 2.50% (Present effective rate 9.15%) Term Loan: EBLR + 2.00% (Present effective rate 8.65%).
h.	Primary Security	Overdraft: Nil. Term Loan: Assets created out of bank finance.
i.	Collateral Security	Overdraft: Nil. Term Loan: Loan to be covered under CGTMSE. CGTMSE fee to be borne by the borrower.
j.	Personal Guarantee	Applicable. Personal guarantee of promoter (s) to be taken.
k.	Repayment Period	Overdraft: On demand. Term Loan: Repayable in 60 EMIs. (With maximum moratorium of 12 months).
l.	Processing Fee	Up to Rs. 10 lacs: Rs. 500 plus applicable taxesAbove Rs. 10 lacs: Rs. 1000 plus applicable taxes
m.	Pre-Payment Penalty	Nil
n.	Penal Interest	5% p.a. over and above the existing rate of interest on overdue amount for the period of default (as per CPPD card rate).
o.	Stock Statement	Not required. However, for TL, schedule of fixed assets created out of bank finance to be obtained and annexed to SME-2.
p.	Documentation	SME documents to be obtained. In case of overdraft facility only SME-1, DP Note, DP delivery letter to be obtained. For TL facility applicable SME documents.
q.	Sanctioning Authority	As per scheme for delegation of financial powers. For OD facility: Sanction powers as applicable to Clean/ Unsecured loans as per Circular No. CDO/ORG-DFP/5/2019-20 dated 06.03.2020 will be applicable.
r.	RMD Guidelines	Not applicable
s.	Inspection	For Term Loans: Quarterly.
t.	Inspection Charges	Nil
u.	Insurance	As per bank’s extant instructions.
v.	End Use of Funds	Funds to be utilized for business and not for speculative purposes. (Certificate of end use of funds to be obtained.). Post disbursement visit to be made by credit official to verify and to ensure that Fixed Asset has been acquired.
w.	KYC Exercise	KYC exercise to be done as per Bank’s extant instructions. CA’s status to be checked through URL https://www.icai.org/traceamember.html

Sr.	Parameters	Features
x.	Other Conditions	Takeover is not proposed. Current accounts with other banks to be closed after disbursement. However, borrower will have to undertake at the time of application submission that he will close current account with other bank after disbursement. All transactions to be routed through our Current account (OD account). Disbursement (Term Loan): Directly to the supplier’s account. Margin to be brought up front. No reimbursement is allowed. Regular monitoring of transactions to be done. Upon account becoming SMA-0, notice to be sent immediately and thereafter every fortnight. If no credit transactions during one month, necessary steps be initiated. In case of default the matter to be reported to ICAI/ NFRA for necessary action. An undertaking in this regard to be obtained from the applicant at the time of disbursement. All other accounts of the borrower, including SB account to be migrated to us. In the event of default/NPA, as an option to charging penal interest of 5% over & above the existing rate on overdue amount for period of default, the advances may be called-up.
y.	Product /Scheme Code	To be created afresh.
z.	DSCR	Minimum acceptable DSCR: 1.50.