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Frequently Asked Questions

FAQs w.r.t Term Lending by JKDFC Ltd.

Does J&K Development Finance Corporation provide both Term & Working Capital loans ? 

J&K Development Finance Corporation Ltd. extends Term Loan facility only. It does not extend Working Capital loans as it is not a part of payment & settlement system as are the scheduled Banks.

What are the sectors that are provided Term Loans by the JKDFC Ltd ? 

JKDFC extends term loan facilities to MSME manufacturing sector only. It also provides Term loans for establishment of Hotels & Guest Houses. It does not finance commercial transport.


What is the quantum of Term loan that JKDFC can provide to an MSME  manufacturing unit ?  

JKDFC provides term loans in the range of Rs. 20 lakhs to Rs. 1000 lakhs to any individual, partnership firm or a Company, established under Companies Act, 1956.  

Does the Corporation provide term loans to MSME Service sector?

As of now, the Corporation does not extend term loans to MSME service sector.


Does the Corporation provide the services of Counseling/Detailed Project Report Formation (DPR)?

Yes, the DPR’s are issued on cost to cost basis.

What is the %age of the project cost that JKDFC finances as term loan?


Depending upon the credentials of the prospective entrepreneur & viability of the Project, the range of Term loan varies from 65% to 75% of the project cost.


What is the rate of interest charged by JKDFC on the term loans?

Loans are provided on competitive rates.


What is the security to be offered to JKDFC against the term loan granted?


Primary security with two guarantors together with collateral security as under:


up to a term loan of            Rs. 50.00lakhs 

100% of the loan amount

above Rs. 50.00lakhs to     Rs. 150lakhs  


75% of the loan amount with a minimum of Rs. 50.00lakhs 

above Rs. 150 lakhs to      Rs. 1000.00 lakhs


50% of the loan amount with a minimum of Rs. 112lakhs



Is JKDFC a Member Lending Institution of Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) & whether it provides collateral & guarantee free loans to MSE sector under CGTMSE Scheme?

JKDFC is an MLI of CGTMSE. It can finance under CGTMSE cover up to a loan of Rs.50.00lakhs, depending upon the viability of the project & credit rating of the entrepreneur.  


What is the periodicity of the term loan? 

The term loan is repayable in quarterly rests within a period of five years with a moratorium of 1-2 years, depending upon the implementation period of the project.


When & how the interest is charged? 

The interest is charged/ payable on balance outstanding on quarterly basis.

What are the approvals necessary for seeking Term loan assistance from JKDFC?


Among other things, following approvals/documents are a pre-requisite while applying for term loan assistance:

- DIC/SIA Registration as the case may be;

- Detailed Project Report;

- Power sanction from JKPDD;

- Land allotment from DIC/JKSIDC/JKSICOP in case of Govt. land;

- Revenue papers/lease deed (for a period of 20years) in case of private.


- NOC from JK State Pollution Control Board;

- Working Capital commitment letter from any scheduled bank.

- NOC from Banks/FI’s operating in the area where unit is to be set up.


How are funds released once the term loan is sanctioned?

Once term loan is sanctioned & legal documentation is completed, the Corporation will release its part of funding on “First Investment Clause” Basis whereby the entrepreneur shall have to invest his contribution in full in first instance where after the Corporation will release its part.


FAQs w.r.t Central Special Package of Incentive for the State of J&K as J&K Package-II

What are the incentives being provided in the J&K Special Central Package-II? 


a)    Central Capital Investment Subsidy to all new industrial units & existing units on their Substantial Expansion @ 15% of the investment on P&M subject to a ceiling of Rs. 30.00 lakh & @ 30% for MSME sector subject to a ceiling of Rs. 3.00 crore for manufacturing sector & Rs. 1.50 crore for service sector.


b)    3% Central Interest Subsidy on the Working Capital Loan to new industrial units for a period of 5 years from the date of commercial production/operation.

 c)    Central Comprehensive Insurance Subsidy to the extent of 100% to all the new & existing units on substantial expansion for a period of 5 years from the date of commercial production/operation. 

What is the duration of the scheme?

The scheme shall be operative for a period of five years from 15.06.2012 to 14.06.2017.

Who is eligible for these incentives?

The subsidy will be available to the Industries in notified areas and also to specified Thrust  Industries outside such notified areas.

(for details pl. refer: Package States)


Is there any industry which falls in the negative list and hence ineligible for subsidy? 

Yes. The negative list includes:

 a)   Cigarettes/cigars of tobacco, manufactured tobacco & substitutes, distillation/brewing of alcoholic drinks & manufacture of branded soft drinks & its concentrates.

b)    Weapon or ammunition.

c)    Pan Masala as covered under Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986). 

 d)    Plastic carry bags of less than 20 microns as specified by Ministry of Environment & Forest Notification No. S.O. 705E dated 02.09.1999 & S.O. 698E dated 17.06.2003.


Can a single unit avail subsidy from Central as well as State Government for the same purpose?

No. Incentives can be availed either under State or Central scheme only.


Are the units financed by JKDFC only eligible for subsidy?


No.  The unit can be financed by any Bank/FI. Self financed units are also eligible for Capital Investment Subsidy & Insurance Subsidy.


What is the eligibility period of the scheme? 

The subsidy will be available during the duration of the scheme to such units as have pre-registered & commenced commercial production/operation prior to 14.06.2017.

When can a unit file its claim for subsidy? 

The unit should file its claim as per prescribed procedure with General Manager. District Industries Centre concerned within one year from the date of commencement of     commercial production/operation.


Is second hand Plant & Machinery eligible for Capital Investment Subsidy? 

No, second hand P&M is not eligible for Capital Investment Subsidy.


Is Plant & Machinery which has been procured by making cash payment eligible for Capital Investment Subsidy?


No, cash payment whatsoever is not eligible. Payments made through Cheques /RTGS/ NEFT/DD are only eligible for Central Govt. Package of Incentives. 

Can the subsidy be disbursed prior to commencement of commercial production? 

No, the subsidy is disbursed only after commencement of commercial production after pre-disbursement inspection has been conducted.


Which unit qualifies to be a new industrial unit & which unit can be termed as an existing unit? 

An industrial unit which commences commercial production/operation on or after 15thJune, 2012 will be treated as a new unit and a unit which has commenced commercial production/ operation before 15th June, 2012 will be treated as an existing unit.


What criterion has to be fulfilled for substantial expansion of an existing unit? 

Substantial expansion means increase by not less than 25%in the value of Plant & Machinery of an industrial unit for the purpose of expansion of capacity. 


Insurance subsidy is calculated on the book value or the market value of the assets? 

For claiming the insurance subsidy, policy obtained on market value of the assets is considered.


Is insurance cover for stocks of the unit eligible for insurance subsidy? 

No. Insurance cover for stocks of the unit is not covered under this package.


Which components will not be considered for computing the value of Plant &  Machinery eligible for Capital Investment Subsidy? 

The components which are not considered include, loading & unloading charges, sheds/ buildings for Plant & Machinery, miscellaneous fixed assets such as DG sets, etc, working capital  including raw material and other consumable stores, commissioning cost, captive power  plants, storage equipments, weigh bridge, laboratory testing equipment, erection & installation charges.


What is the procedure for settlement of claim under Central Package-II? 

Concerned GM, DIC after having received the claim will process the same, in terms of   DIPP, GOI, Ministry of Commerce & Industry Guidelines for being  placed before the State Level Committee-I. SLC after according approval will refer the cases to Directorate  concerned for issue of sanction or otherwise. Same will be followed by documentation by concerned GM,DIC. GM, DIC concerned after compliance of all codal formalities will forward the case to JKDFC through concerned Direct orate for release of funds. JKDFC on receipt of the claim documents will conduct on spot inspection to ascertain the functional status of the unit as on date of disbursement.