Different banks put forward many standard requirements for industrial establishments before they give out loans to them. However, there is one such requirement that the banks often ask that the applicant may not be aware of. Banks today require the Pollution No Objection Certificate issued by the concerned State Pollution Control Boards or the Pollution Control Committee as a Pollution NOC for bank loans. Documents required in the case of factory building may vary depending upon the type of loans sought by the unit. For instance, the basic documents required to process the loan application for working capital limits for For Term Loans in the case of MSME are:
If someone is considering opting for bank loans to start or expand their business, they must be aware of the categories in which the loans are given to businesses. The following are some of the general criteria for business entities to apply for a business loan.
Consent to Establish: Before starting the construction, it is mandatory to acquire Pollution NOC in the form of Consent to Establish (CTE) from the State Pollution Control Board or the Pollution Control Committee. Only after acquiring CTEthe project proponent should initiate the construction stage or set up the business. If the business loan is required to set up the facility, this NOC will be asked as proof by the banks to establish the legality of the business.
Consent to Operate: Once this construction phase is completed and the building is ready to operate, the individual must acquire a second Pollution NOC, i.e. the consent to operate or CTO from the State Pollution Control Board. This consent NOC allows the individual to start the operations and is subject to the fulfilment of the SOP concerning pollution control and safety measures in the facility. The banks may ask for CTO if the applicant approaches the bank for approval of the loan for the business. The documents required for Pollution NOC for bank loans are as follows
The method for acquiring a Consent Certificate or the NOC for bank loans is explained below
Applicants must submit the application for Consent NOC before applying for any bank loan. The application and the prescribed fee must be submitted through the Online Consent Management and Monitoring facility of the respective state/ union territory, along with the required documents.
After submitting the application, the concerned SPCB/PCC will process the application, scrutinise all documents as per the stipulated guidelines, and notify the applicant of corrections, if any, in the application. After successful scrutiny, the CTE will be granted, and the applicant can approach the bank.
After construction is completed, the application for CTO as a subsequent step towards completing the remaining formalities or Pollution NOC for bank loans must be made. Here, a site inspection is scheduled and carried out by an inspecting officer of the pollution Board. If the inspection report is satisfactory, the appropriate authority will issue CTO. The whole process can take up to 120 days.
At the time of document submission to the bank for Pollution NOC for bank loans, the Pollution NOC and other clearance must be acquired beforehand by the applicant for establishing the unit. The bank only processes the loan application after scrutinising the NOC document and sanctions the loan to the business.
The various checks and balances developed by the Pollution Control Board are a means to preserve the environment that we all live in. Demanding the Pollution NOC for bank Loans is a way of ensuring that whatever money the bank loans to a business doesn’t turn out as a non-performing asset, apart from other reasons. Pollution NOC, therefore, becomes a must-have document for the applicant before he/she reaches the bank in need of a business loan.
Read our Article: Consent to Operate vs Consent to Establish from Pollution Control Board