CGTMSE & other loan guarantee guidelines in India updated 28 Nov. 2018

1. CGTMSE
(CGFSEL, CGFSSD, CGFMU & CGSSI)
Presented by,
Abinash Kr. Mandilwar
Chief Manager & Faculty Member,
BOI STC, Bhopal

2. INTRODUCTION
 GOI and SIDBI jointly set up Credit Guarantee Fund Trust
for Small Industries(CGTSI) in 2000.
 Credit Guarantee Fund Trust for Micro & Small Enterprises
(CGTMSE) wef 2nd July 2007.
 ‘Zero’ risk weight for guarantee cover available.
 NPA Accounts, no provisioning for cover portion.
 In NPA account claim settlement to the extent of 75% of
eligible amount is Immediate within 30 days.

3. AMENDMENTS IN CGTMSE
SCHEME 2018
The major amendments in the Scheme are as under:-
a) Expanding the Coverage of the Credit Guarantee
scheme (CGS) to cover MSE Retail Traders
segment.
b) Charging Annual Guarantee Fees (AGF) on
outstanding loan amount rather than the sanction
amount.
c) Allowing Loans with partial collateral security
under Credit Guarantee Scheme.
d) Increase in the extent of guarantee coverage to
75% from existing 50% for proposals above Rs.50
Lakhs.

4. ELIGIBILITY CRITERIA
All MSE Loan sanctioned limit up to Rs. 200 lakh.
Account should be Standard & Regular (not reported
SMA as per RBI Norms) as on application date.
Loan under Consortium are not eligible under the
scheme.
Loans to SHGs are not eligible under the scheme.
Educational Institutions/Training Institutions are
not covered under the Scheme,
All units should have a valid Udyog Adhaar No.
(UAN).
Both Term Loan and Working Capital covered.
Both Fund Based & Non Fund Based covered.

5. CGTMSE COVER FOR RETAIL TRADE
Credit Facility extended to Borrowers engaged in Retail Trade
activity will now be covered under CGTMSE scheme with effect from
28.02.2018 (credit facility eligible for coverage on or after 28.02.2018).
The details are hereunder:
a) Exposure Limit for Credit facility of all Retail Trade segment will
be up to Rs 100 Lakh per MSE Borrowers (wef 31.10.2018 CGTMSE
has removed floor limit of Rs. 10 lakh in Retail Trade Segment).
b) Extent of Guarantee coverage to such credit facility would be 50% of
amount in default irrespective of the category of the borrower.
c) Applicable Fee i.e. AGF will be charged at the rate of 2% of the
guaranteed amount for the first year and on outstanding amount for
the remaining tenure of the credit facility. Differential pricing
structure depending upon NPA percentage and Claim payout
ratio of the Member Lending Institution (MLI) will also be
applicable on the AGF.

6. SALIENT FEATURE
 A Borrower can be given benefit of coverage only
once in his/her lifetime under CGTMSE aggregating
from all lenders up to maximum amount of Rs. 200
Lakh, including previous sanctioned limits (even if
closed) and present sanctioned limit.
 For loans up to Rs. 10 Lakh, no collateral security or
third party guarantee should be obtained, to be eligible
under the scheme.
 For loans above Rs. 10 Lakh, no third party guarantee
allowed but partial collateral security may be obtained.
The details of the same has been explained in circular,
under Hybrid model of the scheme.
 Waiver of collateral security may be extended for loans
over Rs. 10 Lakh and up to Rs. 25 Lakh subject to good
track record and financial position of the borrower and
with prior approval from ZLCC, on case to case basis.

7. SALIENT FEATURE
 In case an account which had been sanctioned earlier had been
omitted to be covered under the scheme, only Working Capital
accounts of such borrower can be covered at the time of
review/renewal of accounts.
 Where the borrower is enjoying several distinct credit facilities,
one or more out of the same can be covered up to the Eligible
Amount (presently Rs.200 Lakhs).
 If additional credit facilities sanctioned, Fresh applications have to be
submitted for additional limit.
 From 31.10.2018, CGTMSE has removed rate of interest limit cap of
14% for all eligible loan account.
 All existing and new MSE Accounts covered under CGTMSE and
without any collateral security with limit up to Rs. 100 lakhs will be
eligible for 0.5% interest concession.
 Lock in period is 18 months from date of last disbursement of loan or
date of payment of guarantee fee whichever is later.

8. SALIENT FEATURE
 Application for Guarantee cover lodged online
through Zonal Office designated as Nodal
Offices.
 The Bank is required to pay the guarantee fee
within 30 days from the date of first
disbursement of credit facility (Not Applicable
for Working Capital) or 30 days from the date of
Demand advice (CGDAN) of guarantee fee
whichever is later or such date as specified by
the CGTMSE.
 Other Charges such as interest in term loan,
Penal Interest, Commitment Charge, Service
charge or any other expenses shall not qualify for
guarantee cover.

9. GUARANTEE COVER LIMITATION
 The Guarantee Cover shall run through the entire agreed
tenure of the Term Credit in case Term Loan, sanctioned
alone for the defaulted principal amount.
 The guarantee cover for Cash Credit alone will be renewed
thereafter for a block of 5 years, subject to coverage for
Cash Credit will be valid up to maximum tenure of 10 Years
from the original cover start date for outstanding (inclusive of
interest) or on the date of submission of claim whichever is
less.
 However in case of composite loan, if the term loan period
exceeds ten years, cover for term loan will continue for
the whole tenor of term loan but for Working Capital,
the tenure of cover will be restricted to maximum period of
ten years.

10. EXTENT OF GUARANTEE COVER
AVAILABLE W.E.F. 01/04/2018
CATEGORY UP TO
Rs.5.00 lakh
>Rs.5.00 lakh TO
Rs.50.00 lakh
> Rs. 50.00 lakh TO UP
TO Rs. 200.00 lakh
Micro
Enterprises
85%
Maximum
Rs. 4.25 lakh
75% Maximum
Rs. 37.50 lakh
75% of amount default
amount maximum
Rs. 150.00 lakh
Women/
NE Region
80% Maximum Rs.40 lakh 75% of amount default
amount maximum
Rs. 150.00 lakh
All others 75% Maximum Rs.37.50 lakh 75% of amount default
amount maximum
Rs. 150.00 lakh

11. GUARANTEE FEE (UP FRONT)
Credit Facility
Annual Guarantee Fee (AGF) [% p.a.]*
Women, Micro Enterprises and Units
covered in North East Region
Others
Up to Rs. 5 Lakhs 1.00 + Risk Premium as per extant guidelines of the Trust
Above Rs.5 Lakhs and up
to Rs.50 Lakhs
1.35 + Risk Premium as per extant
guidelines of the Trust
1.50 + Risk Premium as
per extant guidelines
of the Trust
Above Rs. 50 Lakhs and up
to Rs.200 Lakhs
1.80 + Risk Premium as per extant guidelines of the Trust
 *AGF will be charged on the guaranteed amount for the first year and on the outstanding
amount for the remaining tenure of the credit facility.
 MSE Retail Trade Activity: The AGF will be charged at 2% of the guaranteed amount for the
first year and on the outstanding amount for the remaining tenure of the credit facility.
 Additional risk premium of 15% will be charged on the applicable rate to MLIs who exceed
the pay-out threshold limit of 2 times more than thrice in last 5 years. This premium will be
applicable for all guarantee accounts irrespective of the sanction date.

12. CREDIT GUARANTEE FUND SCHEME
FOR EDUCATION LOANS (CGFSEL)
 Obtention of cover under Credit Guarantee Fund Scheme for Education
loans(CGFSEL)by National Credit Guarantee Trustee Company(NCGTC) is
mandatory for all loans up to Rs.7.50 lakhs.
 Date of notification/ Effective date: 16 Sep.2015
 Interest Rate : Maximum Interest Rate not to exceed 2.00% over Base
Rate/MCLR of the Bank.
 Annual Guarantee Fee : 0.50% p.a. of the outstanding loan amount to be
borne by the Bank.
 Guarantee Cover: 75% of the amount in default.
 Claim: 75% of the Guaranteed Amount will be paid within 30 days, rest
25% of the Guaranteed Amount will be paid after obtaining a certificate
from the Bank that all avenues for recovering the amount have been
exhausted.

13. CREDIT GUARANTEE FUND SCHEME FOR
SKILL DEVELOPMENT(CGFSSD)
 Obtention of cover under Credit Guarantee Fund Scheme for Skill
Development(CGFSSD)by National Credit Guarantee Trustee Company(NCGTC) is
mandatory for all loans from Minimum Rs. 5000/- up to Maximum Rs.1.50 lakhs
without Coll. Sec. & TPG.
 Date of notification date: 20 NOV. 2015.
 Effective on all new Skill Loan sanction on or after 15.07.2015.
 Interest Rate : Maximum Interest Rate not to exceed 1.50% over Base Rate/MCLR
of the Bank.
 Annual Guarantee Fee : 0.50% p.a. of the outstanding loan amount to be borne
by the Bank.
 Guarantee Cover: 75% of the amount in default.
 Claim: 75% of the Guaranteed Amount will be paid within 30 days, rest 25% of
the Guaranteed Amount will be paid after obtaining a certificate from the Bank
that all avenues for recovering the amount have been exhausted.

14. CGFMU & CGSSI
All eligible loans up to Rs. 10 lakh of Pradhan
Mantri Mudra Yojna (PMMY) Loans with Micro
Units Development and Refinance Agency Ltd
(MUDRA) is covered under guarantee covered of
NCGTC under Credit Guarantee Fund for Micro
Units (CGFMU).
Stand-up India loan limit from Rs. 10 Lakh to 100
Lakh under CGFSIL.
Besides primary security, the loan is secured by
collateral security or guarantee of Credit
Guarantee Fund Scheme for Stand-Up India
(CGSSI) Loans.

15. CGTMSE MODULE
 A new menu CGTMSE has been developed in Finacle.
 CGTMSE menu is available for standard loan & CC A/c only.
 CGTMSE menu should always use by Up and Down arrow
keys. The help is available by using F2.
 Accounts required to modify ACM-V(MIS Code) for CGTMSE
Guarantee Cover Code as ‘7’.
Application Entry: A- Application Detail:- Branch has to enter &
verify the application data. ZO/HO official will update the
application online by his user id and print the report by web
portal of CGTMSE.
Updation of CGPAN: U- Updation of CGPAN:- After getting
CGPAN from GTMSE, ZO advice the branch and branch update
guarantee start date, Expiry date through U.

16. CGTMSE MODULE
NPA Reporting: N- NPA Reporting:- If an account slipped
to NPA, Branch has to report through option N. ZO will
generate the report and update on CGTMSE website.
Branch has to report on or before last day of Next
Quarter.
Submission of Claim: C- Claim:- Branch has to report the
claim through ZO by using C-Claim. Before claiming the
credit facility has been recalled and the recovery
proceeding have been initiated under due process of
law. Mere issuance of recall notice under SARFAESI
Act cannot be construed as initiation of legal
proceedings for purpose of preferment of claim
under CGS. Lending institution should take further
action as contained in Section 13 (4) of the above
Act.

17. CGTMSE GUARANTEE INVOKATION PERIOD
Guarantee of CGTMSE in respect of accounts covered under
CGTMSE may be invoked if the following conditions are satisfied -
a) Within a maximum period of one year from date of NPA, if NPA is after
lock in period or within one year of expiry of lock-in period, if NPA is
within lock-in period for accounts sanctioned before 01.01.2013.
b) The Branch/Bank can invoke the guarantee in respect of credit facility
within a maximum period of two years from date of NPA, if NPA is
after lock-in period or within two years of expiry of lock-in period, if NPA
is within lock-in period, for accounts sanctioned on or after 01.01.2013
but turned NPA before 15.03.2018.
c) The Branch /Bank can invoke the guarantee in respect of credit facility
within a maximum period of three Years from the date of NPA, if NPA is
after lock in period or within three years of expiry of lock in period, if
NPA is within lock in period for accounts turned NPA on or after
15.03.2018, irrespective of sanction date.

18. CGTMSE MODULE IN FINACLE
Settlement of Claim: S- Settlement:- Settlement of claim is to be
entered and verified by this menu. The CGTMSE shall pay 75% of
guaranteed amount within 30 days.
The balance 25% will be paid on conclusion of recovery proceeding or
after 3 years from decree of recovery, whichever is earlier. Any
amount realized from sale of security should be remitted in full to
the corporation after deducting our expenses etc.
Upgradation: UG- Upgradation:- Upgradation of account reported
through this menu.
Restructured: RS- Restructured:- Restructured of account reported
through this menu.
Reporting of closed A/C: CL- Reporting of closed A/c
Available Reports: MISRPT=> CGTMSE
The consolidated reports can be generated to monitor CGTMSE
portfolio in HO/ZO/BRANCH level.