(1) No loan shall be granted to any industry, other than a small scale industry, of an amount exceeding seventy per cent or to any small scale industry of an amount exceeding ninety per cent of the net value of the assets of the industry after deduction of the value of all encumbrances existing at the time the application is made :



Provided that in the case of a new or nascent small scale industry, the State Government may grant a loan equal to the value of the security offered including collateral security, if-



(i) the State Government is satisfied that it is necessary in the interest of the State to promote the development of such industry and the industry can not be established without the grant of assistance ; and



(ii) the applicant agrees to associate a nominee of the State Government with the management of the industry and to regulate expenditure out of such loan in the prescribed manner :



Provided further that subject to such other conditions as may be prescribed, a loan for a period not exceeding two years may be given to a small scale industry 6n the security of movable property including stock in trade



(2) Notwithstanding anything contained in sub-section (1), a loan of an amount not exceeding five hundred rupees may be given in the case of an industry owned or managed by an artisan on the personal bond of the applicant or on the security of one or more personal sureties.



(3) The valuation of the assets or the security, as the case may be, under sub-section (1) shall be made in the prescribed manner by the Director or any other person authorised by him in that behalf



Explanation-For the purpose of such valuation the additional assets which may be created by the grant of such State-aid may be taken into account such extent as may be prescribed.