Govt notifies Credit Guarantee Fund Scheme for purpose of providing guarantee in respect of factoring loans

By | October 8, 2015


Credit Guarantee Fund Scheme

NOTIFICATION NO. SO 2606(E) [F.NO.17/6/2013-I.F. II (VOL.II)], DATED 22-9-2015

In pursuance of the approval of the Cabinet vide its minutes of the meeting dated 10th December 2014 the Central Government hereby makes the following scheme for the purpose of providing guarantees in respect of factoring loans.



1 (a) Title and date of commencement

(i) The Scheme shall be known as the Credit Guarantee Fund Scheme for Factoring (CGFSF).
(ii) It shall come into force from the date of notification by the Government of India.

(b) Definitions

For the purposes of this Scheme—

(i) Definition of MSME : Micro, Small and Medium Enterprises as defined in terms of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 which is at present as under:
Categories Manufacturing (Investment in plant and machinery) Services (Investment in equipments)
Micro Does not exceed Rs. 25 lakh Does not exceed Rs. 10 lakh.
Small More than Rs. 25 lakh but does not exceed Rs. 5 crore. More than Rs. 10 lakh but does not exceed Rs. 2 crore.
Medium More than Rs. 5 crore but does not exceed Rs. 10 crore. More than Rs. 2 crore but does not exceed Rs. 5 crore.
(ii) Definition of Factors [Member Institutions- MI]
(a) Banks : All public sector banks, private sector banks and foreign banks which are members of IBA and are carrying out factoring business.
(b) Definition of NBFC Factor : “Non-Banking Financial Company – Factor (NBFC-Factor)” means a non-banking financial company as defined in clause (f) of section 45-I of the RBI Act, 1934 and which has its principal business as defined by RBI and has been granted a certificate of registration under sub-section (1) of section 3 of the Act.
(c) As per RBI instructions, an entity not registered with the RBI may conduct the business of factoring if it is an entity mentioned in section 5 of the Factoring Regulations Act, 2011 i.e. a bank or any corporation established under an Act of Parliament or state Legislature, or a Government Company as defined under section 2(45) of the Companies Act, 2013 (viz. section 617 of the Companies Act, 1956).

(iii) Amount in Default:

On the issue of claim amount, only the net loss could be claimed against the guarantee subject to maximum guarantee payment per MSME seller.



2. Guarantees by the Fund

The Credit Guarantee Fund Scheme for Factoring (CGFSF) shall be confined to domestic factoring of receivables of MSMEs in India.
Exposure Limits: The exposure limit for purchaser would be upto 10% [relaxable upto 20% in case of AAA rated purchasers] of the corpus of Credit Guarantee Corpus Fund for Factoring as per the last audited figures for factoring ‘without recourse’ only.
Credit guarantees cover on the amount in default covering factoring transactions [assistance extended by factors to MSMEs] as per Factoring Regulations Act, 2011 is detailed hereunder:
First loss of 10% of the amount in default to be borne by Factors.
The remaining 90% of the amount in default will be borne by NCGTC and Factors in the ratio of 2:1 respectively.
Only the assigned factored debts would be covered under guarantee scheme.

3. Coverage and Eligibility

All NBFCs-Factor, scheduled commercial banks etc., as defined under Para 1(b) above, engaged in factoring or receivable financing activities in compliance with the Reserve Bank of India guidelines pertaining to factoring shall be eligible for coverage.
Trade Receivables Discounting System [TReDS] to be covered under the Credit Guarantee Scheme as and when it is in place. The suitable guidelines will be framed and issued by the NCGTC when the scheme will be operational.

Factored Debts not eligible under the Scheme

4. The following factored debt shall not be eligible for being guaranteed under the scheme:

i. Any factored debt in respect of which risks are additionally covered under a scheme operated / administered by any other scheme, to the extent they are so covered.
ii. Any factored debt in respect of which risks are additionally covered by Government or by any general insurer or any other person or association of persons carrying on the business of insurance, guarantee or indemnity, to the extent they are so covered.
iii. Any factored debt, which does not conform to, or is in any way inconsistent with, the provisions of any law, or with any directives or instructions issued by the Central Government or the Reserve Bank of India, which may, for the time being be in force.

Agreement to be executed by the Factor

5. The Factor shall be entitled to a guarantee in respect of eligible debt factored by it after it has entered into an agreement with NCGTC in such form as may be specified by NCGTC.

6. Responsibilities of Factor under the Scheme:

i. The Factor shall evaluate the proposal for factoring in accordance with the extant rules and regulations and conduct the account(s) of the borrowers with normal factoring practices/financial prudence.
ii. The Factor shall ensure to submit the information required by NCGTC for giving guarantee cover with regard to the factored debt within 3 days from the date of the first operation in the account.
iii. The Factor shall ensure that the guarantee claim in respect of the factored debt and borrower is lodged with NCGTC after a period of 90 days but within 120 days from the date of account turning NPA, in the form and in the manner in this behalf and that there shall not be any delay on its part to notify the default in the borrowers account which shall result in the Fund facing higher guarantee claims.
iv. The payment of guarantee claim by NCGTC to the Factor does not in any way take away the responsibility of the Factor to recover the entire outstanding amount of factored debt given with recourse, from the borrower with applicable interest. The Factor shall exercise all the necessary precautions and initiate such necessary actions for recovery of the outstanding amount, including such action as may be advised by NCGTC
v. The Factor shall comply with such directions as may be issued by NCGTC, from time to time, for facilitating recoveries in the guaranteed account, or safeguarding its interest as a credit guarantor, as NCGTC may deem fit and the factor shall be bound to comply with such directions.
vi. The Factor shall, in respect of any guaranteed account, exercise the same diligence in recovering the dues, and safeguarding the interest of the fund in all the ways open to it as it might have exercised in the normal course if no guarantee had been furnished by the Fund. The Factor shall, in particular, refrain from any act of omission or commission, either before or subsequent to invocation of guarantee, which may adversely affect the interest of the Fund as the guarantor. In particular, a guarantee cover should not dilute or affect in any way the right of the Factor to enter into compromise and/or settlement with a borrower or debtor. Any such settlement etc. should be promptly intimated to NCGTC. Further, the factor shall secure for the Fund or its appointed agency, through a stipulation in an agreement with the borrower or otherwise, the right to publish the defaulted borrowers’ names and particulars by NCGTC.



7. Guarantee Fee

i. With a view to facilitate wider coverage of the Fund and its sustainability, the guarantee fee chargeable from the MLIs shall be 0.10% per month for “factoring with recourse” and 0.12% per month for “factoring without recourse” on the outstanding balance at the previous month end.
ii. First Guarantee Fee may be made payable from the beginning of the next month as guarantee cover would be available from the date of receipt of fee by NCGTC. Subsequently, monthly guarantee fee may be paid within 7 days of the end of the calendar month to which it pertains (the Factor would need to furnish a Management Certificate duly signed by authorized signatory within 3 days from the end of the month, after which, a Credit Guarantee Demand Advice Note [CGDAN] would be issued by NCGTC within 1 day of receipt of Management Certificate).Provided further that in the event of non-payment of guarantee fee, liability of the Fund to guarantee such credit facility would lapse in respect of those facilities against which the service charges are due and not paid.
iii. The amount equivalent to the guarantee fee payable by the eligible factor may be recovered by it, at its discretion from the eligible borrower.
iv. The guarantee fee once paid by the factor to NCGTC is non-refundable. Guarantee fee shall not be refunded, except under certain circumstances like—
Excess remittance,
Remittance made more than once against the same factored debt,
Guarantee fee paid in advance but application not approved for guarantee cover under the scheme, etc.



8. Extent of the Guarantee

Credit guarantees cover on the amount in default covering factoring transactions [assistance extended by factors to MSMEs] as per Factoring Regulations Act, 2011 is detailed hereunder:
First loss of 10% of the amount in default to be borne by Factors.
The remaining 90% of the amount in default will be borne by NCGTC and Factors in the ratio of 2:1 respectively.

The guarantee cover will commence from the date of payment of guarantee fee and shall run through the currency of the factoring facility.



Invocation of guarantee

9. Claims shall be filed by Mls with the proposed Fund, after 90 days from the date of account turning NPA but before 120 days. While, 75% of claim amount shall be settled within a period of 120 days from the date of the lodging of claim and completion of required documents, the balance 25% of the claim amount shall be paid after 24 months from the date of 1st settlement or exhausting all legal remedies based on a certificate from the factor, whichever is earlier.

10. Subrogation of rights and recoveries on account of claims paid

i. The Factor shall furnish to NCGTC, the details of its efforts for recovery, realizations and such other information as may be demanded or required from time to time.
ii. Every amount recovered and due to be paid to NCGTC shall be paid without delay, and if any amount due to NCGTC remains unpaid beyond a period of 30 days from the date on which it was first recovered, interest shall be payable to NCGTC by the Factor at the rate which is 4% above Bank Rate for the period for which payment remains outstanding after the expiry of the said period of 30 days.
iii. In the event of a client owing several distinct and separate debts to the factor and making payments towards any one or more of the same, whether the account towards which the payment is made is covered by the guarantee of the Fund or not, such payments shall, for the purpose of this clause, be deemed to have been appropriated by the lending institution to the factored debt covered by the guarantee and in respect of which a claim has been preferred and paid, irrespective of the manner of appropriation indicated by such client or the manner in which such payments are actually appropriated.



Appropriation of amount realized by the factor in respect of a credit facility after the guarantee has been invoked.

11. Post invocation of the guarantee claim, if any recoveries are made, MLIs shall first adjust such recoveries towards the legal costs incurred by them for recovery of the amount and then shall share proportionately the recoveries affected in an account, upto the extent of amount of claim settled by NCGTC.

12. Fund’s liability to be terminated in certain cases

i. If the liabilities of a borrower to the factor on account of factored debt guaranteed under this Scheme are transferred or assigned to any other borrower and if the conditions as to the eligibility of the borrower and the amount of the factored debt and any other terms and conditions, if any, subject to which the factored debt can be guaranteed under the Scheme are not satisfied after the said transfer or assignment, the guarantee in respect of the factored debt shall be deemed to be terminated as from the date of the said transfer or assignment.
ii. If a borrower becomes ineligible for being granted factored debt under the Scheme, the liability of the Fund in respect of factored debt granted to him/her by a Factor under the Scheme shall be limited to the liability of the borrower to the Factor as on the date on which the borrower becomes so ineligible, subject, however, to the limits, if any, on the liability of the fund fixed under this Scheme.

13. Returns and Inspections

i. The Factor shall submit such statements and furnish such information as NCGTC may require in connection with Factored debt under this Scheme.
ii. The Factor shall also furnish to NCGTC all such documents, receipts, certificates and other writings as the latter may require and shall be deemed to have affirmed that the contents of such documents, receipts, certificates and other, writings are true, provided that no claim shall be rejected and no liability shall attach to the Factor or any officer thereof for anything done in good faith.
iii. NCGTC/or its representative shall, insofar as it may be necessary for the purposes of the Scheme, have the right to inspect or call for copies of the books of account and other records (including any book of instructions or manual or circulars covering general instructions regarding conduct of advances) of the Factor, and of any borrower from the Factor. Such inspection may be carried out through the officers of NCGTC or any other person appointed by NCGTC for the purpose of inspection. Every officer or other employee of the factor or the borrower, who is in a position to do so, shall make available to the officers of NCGTC or the person appointed for the inspection as the case may be, the books of account and other records and information which are in his possession.

14. Conditions imposed under the Scheme to be binding on the Factor

i Any guarantee given by the Fund shall be governed by the provisions of the Scheme as if the same had been written in the documents evidencing such guarantee.
ii The Factor shall as far as possible ensure that the conditions of any contract relating to an account guaranteed under the Scheme are not in conflict with the provisions of the Scheme but notwithstanding any provision in any other document or contract, the Factor shall in relation to the Fund/NCGTC be bound by the conditions imposed under the Scheme.

15. Modifications and exemptions

i. NCGTC reserves to itself the right to modify, cancel or replace the scheme so, however, that the rights or obligations arising out of, or accruing under a guarantee issued under the Scheme up to the date on which such modification, cancellation or replacement comes into effect, shall not be affected.
ii. Notwithstanding anything herein contained, NCGTC shall have a right to alter the terms and conditions of the Scheme in regard to an account in respect of which guarantee has not been issued as on the date of such alteration.
iii. In the event of the Scheme being cancelled, no claim shall lie against the fund in respect of facilities covered by the Scheme, unless the provisions contained in Clause (i), (ii) and (iii) of section 10 of the Scheme are complied with by the factor prior to the date on which the cancellation comes into force.


16. If any question arises in regard to the interpretation of any of the provisions of the Scheme or of any directions or instructions or clarifications given in connection therewith, the decision of NCGTC shall be final.

Supplementary and general provisions

17. In respect of any matter not specifically provided for in this Scheme, NCGTC may make such supplementary or additional provisions or issue such instructions or clarifications as may be necessary for the purpose of the Scheme.



Name and Registration of the Trust

18. To administer the Scheme, a Credit Risk Guarantee Fund Trust has been set up in the name and style of “Credit Guarantee Fund for factoring” under the Indian Trust Act, 1882, and to be administered by a Board of Trustees.


19. The objects and the purpose of the Trust are:

(a) To provide partial guarantee to factored debts and to encourage Factoring of receivables of MSMEs in India by promoting “factoring without recourse”.
(b) To undertake/ acquire/ procure / take over / run / implement any other scheme of Funds of like nature as may be decided by the Settlor / or the Board of Trustee with the prior approval of the Settlor.
(c) To undertake securitization of the guaranteed loans and to do all other acts or things as may be necessary thereof either directly or otherwise, in such manner as may be decided by the Trustee;
(d) To appoint the staff, acquire, hold and dispose of property, to meet all expenses necessary for the proper and effective management of the Trust, and to do all other acts or things as may be necessary or conducive to the attainment of the objectives.
(e) To receive grants, donations, contributions from national or international donors/agencies, persons as the case may be.
(f) To execute and issue bill of exchange, hundies, promissory notes, such other instruments as may be necessary and expedient in course of discharge of the functions of the Trust,
(g) To do such other acts and things as may be incidental to, or consequential to the objectives hereinabove provided.

20. Board of Trustees

(a) The Settlor hereby appoints National Credit Guarantee Trustee Company Ltd., a company incorporated under the Indian Companies Act, 1956 having its registered office at Jeevandeep Building, Sansad Marg, New Delhi 110001 as the sole Trustee, to manage and operate the Trust fund as provided herein.
(b) The Trustee shall operate the Credit Guarantee Scheme for Factoring which may be modified or altered or amended by the settlor from time to time provided such modifications/alterations shall be made applicable from the date of intimation to Trustee and shall provide reasonable time to Trustee to change its infrastructure etc. as may be required.
(c) The Trustee shall operate any other schemes which may be added, modified or altered or amended by the Settlor from time to time provided such modifications/alterations shall be made applicable from the date of intimation to trustee and shall provide reasonable time to Trustee to change its infrastructure etc. as may be required.

21. Powers and Functions of the Trustee

(a) The Trustee shall manage and administer the affairs of the Trust either itself or through other entity and shall have overall supervision and superintendence of the Trust and all matters incidental thereto or connected therewith.
(b) The Trustee shall strive to fulfill the objectives of the Trust and carry out the implementation of the Credit Guarantee Fund Scheme for Factoring as contained in Guarantee Scheme, which may be modified or amended by the Settlor from time to time or may be replaced or substituted by another scheme as the case may be, to fulfill the objects of the trust.
(c) The Settlor may introduce more schemes if so desired to fulfill the objective of the trust and any matter incidental thereto and the Trustee shall be responsible for operating the scheme/s of the trust as mandated by Settlor. On introduction of any such new scheme as and when introduced by the Settlor or on modification of any existing Scheme/ Fund the Credit Guarantee Scheme for Factoring hereto shall stand modified and substituted accordingly.
(d) The Trustee shall have power and discretion to accept, upon such terms as it may deem fit, any donations and contributions (whether such donations or contributions be in cash or other movable or immovable property or in any other form), from any person or persons, agencies, institutions, body corporate, etc., situated in India and/or abroad, provided always that the terms upon which such donations or contributions shall be accepted shall not in any way be inconsistent with or repugnant to the objectives of this Trust and that no other name shall be associated with the name of the Trust.
(e) To enter into all such negotiations and contracts, and execute and do all such acts, deeds and things for or on behalf of the name of the Trust as the Trustee may consider expedient for or in relation to any of the matters or otherwise for the purpose of the Trust;
(f) To achieve the objectives of the Trust, the Trustee shall have the power and discretion to acquire, hold and dispose of properties whether movable or immovable and to contract, subject to norms of financial prudence and transparency.
(g) The Trustee shall, subject to the provisions hereinabove, from and out of the income realized from the properties, assets and funds of the Trust, and from other such endowments, and from Government grants, and from any other sources which they may get, expend such sum or sums of money as they may deem proper towards the maintenance of the properties of the Trust, pay all rents and taxes, pay such sums towards the repayment of any borrowing by the trustee and meet all expenses which the trustee may in its discretion think necessary for the proper and efficient management of the Trust, and in particular pay the salaries and allowances of all staff and servants, purchase books, equipment and furniture, software & IT infra, license fee etc., pay management contributions for the Provident Fund of the staff, Gratuity, Pension, etc. and generally do all acts, matters and things which may be necessary for any object, purpose of or in relation to the Trust in any manner or into any Scheme of the Trust; to do all such acts, deeds and things, and exercise such powers and sign and execute all such documents, certificate, forms, reports, declarations, affidavits, indemnities as may be necessary in discharge of functions and duties related to Trust/Scheme/Funds or any of them or matters connected therewith in any manner whatsoever.
(h) The Trustee may authorize Chief Executive Officer or any other official of Trustee to open and operate any account on behalf of the Trust, to execute any contract, to endorse and transfer promissory notes, stock, share certificates, securities and documents of title to goods standing in the name of or held in the name of or held by the Trust and to draw, accept and endorse bills of exchange and other instruments and to sign all other accounts, receipts, documents or papers.
(i) The Trustee may constitute such Advisory Committees consisting partly of Directors of Trustee and partly of other persons including persons representing Government, institutions, commercial banks, FIs, organizations etc. for such purposes as it may think fit. The non-official members of the Advisory Committee(s) so constituted shall be paid such fees and allowances as may be determined by the Board of Trustee for attending the meetings of such Committee(s) and such expenses shall be charged to the income/corpus of the Trust fund.
(j) Trust shall sue and be sued through Trustee and the Board of Trustee shall delegate the powers to its officials to take necessary steps in this regard including but not limiting to appoint and engage advocates, solicitors, valuers, chartered accountants, company secretary or any other professional and experts for that matter, in connection with discharge of function under the Trust or relating to any of the Scheme or Schemes being implemented and to pay their remunerations and charges from the Trust Fund(s), and to rely on their advice and opinions, without being liable for any consequence of the advice and opinion obtained in good faith.
(k) Generally to exercise all such powers as it may be required to exercise under the applicable laws for the time being in force and do all such matters things as may be required to promote any of the Schemes of the Settlor/ Trust or as may be incidental to or consequential upon discharge of its functions and exercise and enforcement of all or any of the powers and rights.
(l) The Trustee shall discharge all obligations, duties and responsibilities entrusted upon it as per the apparent tenure and objectives of the Trust/ any clarification or modification thereof by the Settlor and the applicable law.


22. The Trust shall be managed by Trustee professionally without there being any financial obligation and liability for any of the functions relating to the Trust or the Fund for that matter. It is clarified that neither Trustee, its Board, individual Directors, officials or representatives or persons authorized by it shall incur any liability with regard to and on account of carrying out any of the functions of managing the Trust nor shall incur any financial obligation in regard thereof. Trust shall keep Trustee, its Board, its officials other persons as aforesaid indemnified in that regard.

Allowance to Trustee as Office – Bearers

23. Trustee may be paid such fees, charges and expenses (including the applicable tax thereof) as may be agreed from time to time. Trustee may also be reimbursed proper and reasonable expenses incurred in performing their duties, exercise of powers and discharge of obligations under this Indenture.

The Trust including its non-official directors or officials may also be paid such fee and reimbursed such expensed as may be decided by Trustee in consultation with Settlor from time to time. All the expenses in connection with the holding of meetings and all sums, (by way of fee/travelling and lodging and boarding expenses) incurred in this regard shall be payable out of the Funds of the Trust.


24. The accounts of the Trust shall be audited every year by a Chartered Accountant or a firm of Chartered Accountants who will be appointed by the Trustee on the recommendation of Comptroller and Auditor General of India. The remuneration and tenure of such auditor shall be determined by the Board of Directors of the Trustee.

The audited accounts of the Trust shall be adopted at a meeting of the Board of Directors of the Trustee called for the purposes and a copy thereof together with auditor’s report shall be furnished to the Settlor separately within a period of one month of such adoption.

25. Indemnity

(a) Every member of the Board of Directors of Trustee, CEO, other officials, authorized representatives of Trustee shall be indemnified by the Trust against all losses, damages, claims etc. and expenses incurred by him/her in relation to the discharge of his/her duties except such as are caused by his/her own deliberate or willful acts of omission or commission.
(b) Trustee shall not be liable for any breach of trust committed by any official of it except in respect of his/her own act and in respect of any property in his/her custody.
(c) The trustee shall not be under any liability on account of anything done or omitted to be done or suffered to be done by the Trustee in good faith in accordance with, or in pursuance of any request or advice of the Settlor.
(d) Nothing herein contained shall be construed so as to prevent the Trustee from acting as Trustee of trust similar or separate from the Trust and retaining for its own use and benefit, remuneration, profits and advantages which it may derive therefrom.
(e) If the Trustee or the Chief Executive Officer or any other officials of the Trustee is required by Applicable Law to provide any information regarding the Trust Fund and/or the Settlor/ Trustees and income of the Trust Fund and provisions of these presents, and complies with such request in good faith, whether or not it was in fact enforceable, the Trustee or the Chief Executive Officer or any other officials of the Trustee shall not incur any liability to the Settlor or any of them or to any party as a result of such compliance or in connection with such compliance.
(f) Nothing, however, contained, shall exempt or indemnify the Trustee for (a) a deliberate failure to protect the interest of the Settlor, (b) a breach of trust arising out of its own gross negligence, fraud or dishonesty, and (c) a failure to show the degree of care and diligence required of it in carrying out its duties.

26. Powers of the Settlor

(a) Subject to provision of clause 28 hereof, the Trust is irrevocable. Subject as aforesaid, the terms of this declaration may be altered or modified and new Schemes may be added, amended or modified by the Settlor. Provided, however, that no amendment contrary to the objectives of the Trust herein before setforth shall be valid and effective.
(b) Subject to the clause (1) above.
i. The Settlor, may at any time or times hereafter by any deed or deeds revocable or irrevocable or conduct expressly referring to this power or the property subject thereto, may settle more trusts funds and appoint Trustee as it may deem fit;
ii. The Settlor may from time to time alter the provisions including appointment and powers of Trustee and rules and regulations with regard to the conduct of the business and all matters in respect of which provisions are made in this declaration, as it may deem proper.

Jurisdiction of the Courts

27. The competent Court in Delhi shall have exclusive jurisdiction to decide any question regarding the interpretation and construction of this Declaration or administration of the Trust and the related matters

Extinction of Trust

28. If the objectives for which the Trust has been created shall fail or cannot be fullfiled by the Trustee, the Settlor shall be at liberty to apply the Trust Fund and the properties of the Trust, to any other objects or of a like nature which the Settlor shall consider proper and appropriate.

29. Implementation and Operational Cost

(a) The schemes of the Fund will be operationalised and implemented by the Trustee i.e. a “National Credit Guarantee Trustee Company Ltd.” (NCGTC) a company incorporated under the Indian Companies Act, 1956 and is set up to act as trustee and operate the various credit guarantee funds set up / being set up/ to be set up by Gol, other national or international bodies etc.
(b) Trustee shall be responsible for the day to day operation and implementation of Scheme including registration of Member Institutions, guarantee approval, guarantee maintenance, fee collection, claim settlement, investment of the funds, scheme propagation IT Platform etc. and all the matters incidental to operation of the Scheme.
(c) The entire operational cost of running the scheme under this Trust will be met out by the Trustee out of the income of the Trust including guarantee fee, interest & charges relating to the Trust fund and Trustee shall be entitled to claim the same from the Trust income or corpus as the case may be.


30. The Trustee may invest in such of the securities / instruments of investment or lend in the call money or other money markets the amounts available in the corpus fund or any other fund or account which are not for the time being required for the carrying out the objectives of the Trust in such manner as may be approved by the Board of Directors of the Trustee or any committee of the Board constituted for the said purpose. The Management of Trustee shall be guided by the principles of financial prudence or as directed by the Management Committee and shall not be liable for any loss or damages or liability arising out of such investments.


31. The Trustee shall have power to borrow funds from India and / or abroad from such person or persons as may be necessary for carrying out the objectives of the Trust or implementation of the scheme as also powers to give the assets of the Trust as the securities or to give guarantees, as may be necessary for such borrowings provided that all such borrowings shall be made after the prior approval of the Settlor.



Delegation/Framing of Rules

32. The Trustee shall delegate its powers and make rule to give effect to, and carry out the purpose of the Trust and secure effective control over the affairs of the Trust. In particular and without prejudice to the generality of such power, the Trustee may provide for all or any of the following matters namely:—

(a) Issue of guarantee, the right and obligations, terms and conditions thereof,
(b) The form and manner in which an application may be made for the purpose of issuance of such guarantee or any matter connected therewith;
(c) Issuance of the guarantee and the form and manner in which such guarantee may be issued or any of the matters connected therewith;
(d) The procedure for settlement of claim under any of the guarantee or any matter connected therewith;
(e) Allocation of capital in respect of any of the Scheme or Fund, maintenance of separate accounts in respect thereof and other matters relevant to the Scheme or Funds;
(f) Manner of maintenance of the records and particulars of Funds in respect of any one or more Scheme or Fund including matters such as maintaining of separate accounts for each Scheme or Fund and administration of all aspect of such Scheme or Fund consistent with the terms thereof.
(g) Norms of investment by the Trust in accordance with the objectives of the Trust and in accordance with the powers and authorities of the Trust as set out herein;
(h) Such other administrative, procedural or other matters relating to the administration or management of the affairs of the Trust or any Scheme or Fund thereof and which matters are not by the very nature required to be included or provided for in this Indenture or any of the order of the Settlor for that matter.
(i) Procedure for conduct of any meeting of the Trustee/Advisory Committees or other committees or any of the matter connected therewith.
(j) Appointment, recruitment of its staff and their service conditions etc .
(k) Any other matter incidental thereto or connected with the operations of the scheme/s of the Trust/s

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