Section 27 in The M.P. State Aid to Industries Rules, 1959
27.
In the case of any industry' to which Section 28 of the Act applies,-(1)No loan shall be granted and no guarantee of cash credit, over-draft or fixed advance with a bank, shall be given unless the value of the security offered is at least equal to 1-1/2 times of the amount of loan except in cases covered by clauses (d) and (e) of sub-rule (2).(2)Every loan, guarantee of cash credit, overdraft or fixed advance with a bank shall be secured by-(a)a mortgage or a floating charge upon the whole assets of the industry; or(b)a mortgage or a floating charge upon the other assets belonging to the applicant; or(c)a mortgage or a floating charge upon the assets of surety or sureties of the applicant; or(d)[ the personal security of the applicant for loans not exceeding rupees two thousand in the case of handicraft artisan and rupees one thousand in the case of others; or] [Substituted by Notification No. 17113-6786-XI-B, dated 16-11-1966.](e)the joint personal security of the applicant and of one or more persons having landed property in Madhya Pradesh in cases of loans exceeding Rs. 1,000 but not exceeding Rs. 5,000 :Provided that in case of loan exceeding Rs. 2,500 at least two such sureties shall be necessary :Provided further that in cases where personal security of one surety is taken in cases of loans not exceeding Rs. 2,500 the surety should be solvent at least to the extent of 1-½ times of the amount of loan to be sanctioned and in case where two or more sureties are taken, they should be each solvent separately at least to the extent of the amount of loan; or(f)a combination of the forms of the security mentioned in clauses (a) to (e).(3)In the case of a co-operative society of workers engaged in any industry, there need not be any security for loans towards the share capital the condition being that the amount of the loan paid to the societies shall be kept with a co-operative bank or joint stock bank and shall be operated upon jointly by the nominee or the society and an official [x x x] [Omitted by Notification No. 7333-2224-XI-A, dated 1-10-1965.] nominated in this behalf by the sanctioning authority.(4)Loans to Co-operative Societies of workers for purposes other than share capital may be granted without any security if the sanctioning authority is convinced of the soundness of the society and the integrity of the office-bearer, such loan being subject to such conditions as the sanctioning authority may deem proper, in the interest of the safety of the loan :Provided that loans to be granted to any Co-operative Society of workers may extend up to the limit of credit laid down by the Society in its bye-laws after allowing for such credit as might have already been obtained or covered by the Society against the limit of its credit.
