Agenda

Subject : Revising Processing Fee Structure and introducing Re-Application fee for NSDC
Partner Proposals
Proposed by: Vandana Bhatnagar; CPO, Skill Development Financing and Monitoring
Approved by : MD & CEO
Submitted for: Approval of the Board

1. Objective
To revise the processing fee structure for NSDC partners with the aim of improving the turnaround
time of proposal closure and to rationalize the quality of proposals being submitted to NSDC.

2. Context
NSDC has received 105 proposals for partnership post introduction of processing fee in last FY 2017-
18. Out of these 105 proposals, 102 have been submitted for due-diligence and 3 were rejected at
FLF stage.

Year Total Proposals Total Fee Received FLF Rejected

received (Lakhs)
FY 2017-18 72 203.86 3
YTD FY 2018-19 33 81.96 0

The processing fee was introduced to recover some of the costs associated with processing of
proposals and reduce the entry of non-serious/non-credible players who would have been anyways
rejected at the diligence stage. However, making the entire processing fee non-refundable has acted as
a deterrent for serious players as well and the number of proposals has declined compared to the years
prior to the introduction of processing fee.
Thus, it is proposed to introduce stage-wise fees for proposal processing instead of realizing the entire
fee at the time of proposal submission. Further, a re-application fee is also proposed as detailed in the
next section.

3. Proposal
Proposal for a two staged fee:
It is proposed to introduce stage-wise realization of fee for proposal processing. The aim is to invite
more applications from the serious players as realizing the entire fee (non-refundable) at the time of
proposal submission as a deterrent to the applicants.
By realizing the fee in two parts, one Demand Draft for application and another at the time of FLF
clearance, more players are expected to apply for the partnership.
The proposal processing fee will be realized in below two stages:
i. At the time of Application: Application fee
ii. At the time of FLF clearance: Post FLF Processing Fee

Details are provided below.

i. Application Fee: A mandatory non-refundable fee will be charged for processing of
loan/grant/equity/non-funding partnership proposal submitted to NSDC. This amount would have to
be paid at the time of submission of the proposal to NSDC.
Non-Funded Funded
Application Fee
INR 50,000 INR 50,000
per proposal

ii. Post FLF Processing Fee: Once the proposal passes the First level Filter (FLF) stage, an
additional fee will be realized as outlined in below table. If the proposal doesn’t pass the FLF stage,
the Demand Draft pertaining to the Post FLF Processing Fee will be refunded back to the applicant.
Non-Funded Funded
Post FLF 1% of Loan amount minus the
Processing Fee application fee*
INR 1,50,000
[Minimum: INR 1.5 lacs;
Maximum: INR 5.5 lacs]
*[Loan amount proposed as part of the proposal to NSDC.]

Proposal for a re-application fee:

Further, it is being proposed to introduce a re-application fee if the applicant wants to apply again
within 6 months of rejection of earlier proposal after FLF stage. The aim is to bring the efficiency in
proposal evaluation. If proposal needs to be refined, the same can be closed and the applicant can re-
submit again within 6 months.
The post FLF application fee will not be charged if the loan amount sought is less than or equal to the
that of last submitted proposal. In case, the amount exceeds the last submitted proposal, the additional
fee will be charged as mentioned in below table:

Non-Funded Funded
Re-Application
INR 20,000 INR 20,000
Fee

Non-Funded Funded
Post FLF NIL
Processing Fee (If amount sought is less than or
(in case of re- equal to that of earlier proposal)
application within NIL
6 months) 1% of the additional Loan amount*
(If amount sought is more than that
of earlier proposal)
*[Additional Loan amount proposed as part of the re-application]

The above fee structure shall be effective for all proposals submitted to NSDC from September 1 st
2018.

4. Justification
The above fee structure is justified in view of the various benefits as mentioned below:
  Realizing the fee in two stages reduces the apprehension of the applicant in applying for
NSDC partnership. If the proposal gets rejected in FLF stage itself, then only the application
fee will be forfeited, and the remaining fee will be refunded to the applicant. Thus, the
proposed fee structure is beneficial for the applicant and will invite more participation.
 The re-application fee helps in bringing the efficiency in the way proposals are evaluated and
reduce the time for which proposal remains in the system, since the proposals which needs
huge amount of re-work can be closed until re-work is done by the applicant, who then can
re-apply again within 6 months.

5. Implementation plan
 On Board approval, the details will be shared on NSDC website, with an effective date
specified.
 The proposed fee-structure for NSDC partner proposals shall be reviewed at the end of 9
months from the date of board approval and any requisite changes shall be presented to the
board for approval.
 To operationalize the process, all additional requirements, addendum to proposal submission
checklists, team building to cater to financial requirements, diligence partners to be updated
and having an online mechanism to monitor the proposal flow will be carried out during the
two months in the interim.

6. Challenges and risks

 Higher objectivity will be required in the diligence process as closures of proposals can lead
to costs to proposal owner and thus may lead to escalations on the diligence process.
 In-house team needs to be strengthened to support with the accounting processes related to
each of the proposed charges/fees. An invoice can be generated for the fees received.
 Above risks shall be mitigated through better articulation of NSDC processes, proactive
outreach, institutionalization of stronger governance for due-diligence and related processes.
 Annexure-1
DETAILS OF PAST PROPOSAL SUBMISSION

Proposals received after introduction of processing fee (FY2017-18 and YTD FY2018-19):
Year Total Proposals Total Fee Received FLF Rejected
received (Lakhs)
FY 2017-18 72 203.86 3
YTD FY 2018-19 33 81.96 0

Total of 105 proposals were received, of which 102 have been submitted for due-diligence.