(i)      Issue of Notice U/S. 29

 After persistent persuasion by way of personal contacts, letters and  subsequent reminders, if borrower does not take tangible steps to regularize the account notice u/s 29 is issued  by the Regional Manager giving time of 30 days for clearance of overdues of the Corporation. Normally the notice U/s 29 is issued after default (of principal and/or interest) of 2 to 3 quarters. Notice U/s.29 can be issued for against prime as well as collateral security.

(ii)     Withdrawal of  Notice U/s. 29.

The power to withdraw notice u/s 29 are as under:
(Rs. in lac)

Loan amt. in Rs.

Power of withdrawal

0-50 Lakh


when entire intt. Overdues are deposited

Full power

50-100 Lakh

Entire intt.+ 50% principal is deposited

Full power

Above 100 Lakh

Total dues are deposited

Full power

(iii)    Release of Advertisement and Publicity

  1. Regional Manager would release advertisements for sale of unit/assets. Apart from the details of Unit/Assets, advertisement may also contain the name of borrowers/promoter/directors/guarantors, date and time of opening the offer, time of negotiation and notice to the borrower to bring the offer or present on the date of negotiation etc.
  2. Publicity for sale of units/assets may also be done through other methods viz. circulation of information of sale on Notice Board, Factory Gate, Industrial Associations website etc.

(iv)    Valuation of Prime and Collateral Security

 The valuation of the  property will be carried out as per the following :-

Type of security



Prime security

1. Disbursed amount is upto 50.00 lakh

2. Disbursed amount is more than Rs.50 lakh

1.Team of officers (Tech +Fin) normally headed by RM

2. As above. Besides valuation may also be done by Govt. approved valuer.

Collateral Security

1.   Collateral amount is upto Rs.50 lakh

2.  Collateral amount is more than Rs.50 lakh

1. Team of officers normally headed by RM

As above. Besides valuation may also be done by Govt. approved valuer.

NOTE:  The Valuation is  worked out as per valuation guidelines of the Corporation.  In case of difference in valuation of Tech. Officer and Govt. approved valuer, average of the two may be considered.

(v)     Receipt of Earnest Money

 The offer to purchase the unit should be accompanied with earnest money by way of Demand Draft/pay order. The amount of demand draft/pay order would be as under in different cases:-

Loan Amount (Rs. in lakh)

Amt. of earnest money (Amt. In rupees)

0 to 2


2  to 5


5 to 10


10 to 50


50 to 100


100 and above


 At the time of negotiation the full bio-data, financial resources, details of movable and immovable property of the purchaser should be asked alongwith earnest money.

(vii)   Refund/Forfeiture of Earnest Money

If the bid is not accepted by the Regional Negotiation Committee, the earnest money would be refunded by the Regional Manager,  within 7 days irrespective of loan amount if the same has been deposited at  RO

If the earnest money has been deposited at H.O. then earnest money would be refunded after approval of M.D.

(viii)  Taking over the possession of the unit

  1. The possession of the unit may be taken over by RM after the expiry of notice period. and reputed security agency would be given supurdgi  to safe-guard the assets/ Unit. The  Supurdgi of Unit may also be given to borrower if he is willing to do so.

(ix)    Noting down of inventory at the time of possession of the unit

  1. Inventory of all the assets including Machines, Furniture/Fixture, misc. fixed assets, scraps and raw material, valuable trees is prepared and value incorporated in the valuation report.
  2. Efforts are be made that a Public Notary or Magistrate should sign on the list of the inventory of the assets. In case the public notary or Magistrate is not available then inventory of the assets shall be signed by two independent persons.
  3. FIR is lodged for missing machines and chik report should be obtained as far as possible.

(x)     Handing over the physical possession of the unit to original borrower

  1. In case the original borrower clears total overdues including expenses of advertisements and security, the Regional Manager may give the possession back to the original borrower. In other cases , Managing Director  is empowered to take decision.

(xi)    Negotiation with the Prospective Buyers.
Sale offers are negotiated with prospective buyers to enhance the amount. In this regard negotiation committee are  authorized to negotiate with the offerers at Regional Level and Head office level.

  1. In order to follow best tradition and transparency in operation the highest negotiated offer is readvertised to invite still better offer atleast 5% heigher with   double  earnest money .
  2. The best offer would be decided not only in terms of amount of money but also taking into account various other factors like down payment, period of payment of deferred instalments, background/financial strength of purchaser etc. All these parameters  should be recorded in the case file/minutes.

 (xiii) Period of Balance Payment

  1. The purchaser would not be charged any interest for two months from the date of issue of sale letter/possession, whichever is earlier.
  2. After the gestation period of two months interest @ 13 ½% would be charged from the purchaser, as per the prevailing system..
  3. The maximum period of one year is given to the purchaser for depositing the balance sale proceeds in equal monthly/quarterly instalments.
  4. The additional interest of 3 ½% would be charged in case the purchaser defaults in payment of sale proceeds.
  5. If the initial down payment has not been deposited by the purchaser in time, the sale approval would be withdrawn and earnest money deposited would be forfeited. The power for revival of sale would rest with concerned approving authority.

(xiv)   Legal Agreement

  1. After receipt of initial down payment the RO will execute agreement to sell/sale deed among participating institution and the purchaser would be handedover the possession immediately.

5.       Refund of Excess money to Borrowers/second charge holders
            Surplus sale proceeds will be refunded to the original borrower after satisfying the dues of Ist charge holder and second charge holder
6.       Change in name of Purchaser

No Change will be considered in sale approved after July 2007 and sale deed shall be executed only in the name of purchaser whose name has been approved at the time of approval.
(However,in cases approved earlier to July 2007, change in name/ constitution may be considered as per guidelines of 2005 subject to that such request for change in name was made by the purchaser in his/their original offer for purchase of assets and Corporation has agreed for the same at the time of approval).

7.       Bifurcation of Sale Consideration

  1. If there are two purchasers one for the land and building and other for plant & machinery, two separate letters would be issued by the Regional Manager
  2. If there is only one buyer for the entire assets i.e. land, building and plant & machinery and the approved sale amount is more or less equal to the valuation of the assets, two separate  sale letters are required to be issued for plant & machinery and land & building at the insistence of the borrower. In all such cases the bifurcation of sale amount shall be calculated on pro-rata to valuation of assets considered at the time of sale.




Copyright 2004 by Uttar Pradesh Financial Corporation.