2. The guidelines will not, however, cover cases of wilful default, fraud and malfeasance. Banks shall identify cases of wilful default, fraud and malfeasance and initiate prompt action.

3. Some of the important highlights of the scheme are given hereunder :-

(A) Guidelines for One-Time Settlement Scheme for SME Accounts upto to Rs. 10 crore

[ i ] Coverage
a) The revised guidelines cover all NPAs in SME sector which have become doubtful or loss as on March 31, 2004 with outstanding balance of Rs.10 crore and below on the date on which the account was classified as doubtful.
b) The guidelines also cover NPAs classified as sub-standard as on 31st March 2004, which have subsequently become doubtful or loss where the outstanding balance was Rs.10 crore and below on the date on which the account was classified as doubtful.
c) These guidelines cover cases on which the banks have initiated action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and also cases pending before Courts/DRTs/BIFR, subject to consent decree being obtained from the Courts/DRTs/BIFR.
d) Cases of wilful default, fraud and malfeasance will not be covered.
e) The last date for receipt of applications from borrowers is as at the close of business on March 31, 2006. The processing under the revised guidelines shall be completed by June 30, 2006.

[ ii ] Settlement Formula - amount
a) NPAs classified as Doubtful or Loss as on March 31, 2004
The minimum amount that shall be recovered under the revised guidelines in respect of one-time settlement of NPAs classified as doubtful or loss as on March 31,2004 will be 100% of the outstanding balance in the account as on the date on which the account was categorised as doubtful NPAs.

b) NPAs classified as sub-standard as on March 31, 2004 which became doubtful or loss subsequently
The minimum amount that shall be recovered in respect of NPAs classified as sub-standard as on March 31, 2004 which became doubtful or loss subsequently would be 100% of the outstanding balance in the account as on the date on which the account was categorised as doubtful NPAs, plus interest at existing Prime Lending Rate from April 1, 2004 till the date of final payment.

[ iii ] Payment
The amount of settlement arrived at in both the above cases, shall preferably be paid in one lump sum. In cases where the borrowers are unable to pay the entire amount in one lump sum, at least 25% of the amount of settlement shall be paid upfront and the balance amount of 75% should be recovered in instalments within a period of one year together with interest at the existing Prime Lending Rate from the date of settlement up to the date of final payment.

[ iv ] Sanctioning Authority
Since the guidelines issued by RBI are non-discretionary and non-discriminatory, the Branch Managers are delegated powers, without going through the Screening Committee process, for (i) sanction of Compromise settlements, (ii) negotiation and approval of terms of payment including payment in instalments, (iii) approve write-off/forego the accrued interest, (iv) reversal of entries in Advances under Collection account (AUCA) (v) withdrawal of legal action and (vi) release of security documents, in the cases falling strictly in accordance with the RBI guidelines. The powers to settle the dues under RBI-OTS for SME, however, will rest with the next higher authority in cases where the loan was sanctioned by present Branch Manager himself.

[ v ] Non-discretionary treatment

The above guidelines are to be followed for one-time settlement of all NPAs covered under the scheme, without discrimination.

All the eligible defaulting borrowers should avail of the opportunity for one-time settlement of their outstanding dues in terms of these guidelines within the stipulated period.