presented by. c.a suresh kumar subrahmanyan & associates office: 14 a/11. manish nagar j.p.road,...

Presented by. C.A Suresh Kumar Subrahmanyan &

Associates

Office: 14 A/11. Manish Nagar J.P.Road, Andheri (West)

Mumbai 53.

CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 128/02/2013

CGT-CREDIT GUARANTEE FUND TRUSTCGTMSE

IntroductionChallenges faced by SMEsObjectiveCredit guarantee schemeEligible Lending InstitutionsRisk coverageRehabilitation assistanceEligible borrowers

CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 2

CGT-CREDIT GUARANTEE FUND TRUSTCGTMSE

Non – eligibilityGuarantee fees structureAnnual Service FeesCost & Interest to the BorrowerAmendment in October 2012Composite all - in guarantee fee


Introduction - CGTMSELaunched by Ministry of Micro, Small & Medium

EnterprisesGuarantee given to Member Lending Institutions

(MLI)For loans sanctioned with out collateral security

and/or third party guarantee.Considering the financial requirements of SMEs &

practical hurdles faced by them in raising finance.CGT guarantees covers for loans sanctioned to a

maximum amount of Rs. 100lacs including fund and non fund based finances given by MLI.


Challenges faced by SMEsLimited available Capital for SMEsSustaining through initial yearsDifficulties in obtaining Finance from

Banks and other lending institutionsRequirement of collateral securitiesRequirement of third party guarantee


OBJECTIVES OF CREDIT GUARANTEE FUND TRUSTMake available Collateral free Credit facility

to SMEsTo strengthen Credit delivery systemTo facilitate flow of Credit to SMEsMLI to give importance for project viabilitySecure credit facility purely on primary

security of assets financedMLI should endeavor to give composite credit

to the borrowers


Credit guarantee schemeAvailable to eligible MLI For any collateral / third party guarantee free

loans extended to new as well as existing Micro & small enterprises

Maximum guarantee cover up to 100lacs.Extent of guarantee cover up to 75/80/85% of

Credit sanctionedTime limit to apply for covering eligible credit

facility sanctioned in one calendar quarter is before end of subsequent calendar quarter

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Eligible Lending InstitutionsAll scheduled commercial BanksSpecified Regional Rural BanksNSIC, NEDFI, SIDBI which have entered into

an agreement with the trust for the purposeEligible lending institutions to enter in to

agreement & become eligible Member Lending Institutions (MLI)

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Maximum Risk coverageUp to 75 % (85% for select category of

borrowers) of the defaulted principal amount in respect of term loans including interest for one quarter

Outstanding working capital advance including interest

Time limit - As on the date of becoming NPA or as on date of filing suit which ever is lower.

Non qualifying amounts – Penal interest, Service charge, commitment charge or any other levies/ charges.


Rehabilitation AssistanceFor the unit covered under CGTMSE and

becoming sick due to factors beyond the control of management, assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit cap of Rs.100 lakhs.


Eligible borrowersNew and existing Micro and Small Enterprises

engaged in manufacturing or service activity excluding 'Retail Trade'.

Loans sanctioned to all activities that come under service sector as per RBI's guidelines on 'Lending to Priority Sector' and MSMED Act 2006, except retail trade are eligible for coverage under the scheme.

Loans given to small road & water transporters Mandatory to have Income tax Permanent

Account Number (PAN)


Eligible borrowers(contd)Additional Credit facilities sanctioned to

existing units can be covered provided no collateral/ third party guarantee is obtained

Where part of credit is covered with collateral and part of facility without collateral security is not eligible if it is of composite in nature.

Credit facilities allowed to eligible borrower can be from various institutions subject to ceiling of 100lakhs per borrower and subject to maximum eligible amount of the MLI.


Eligible borrowers(contd)Co-financing to a MSE unit by Financial

Institution with a Commercial Bank is also covered under the Scheme

Presently credit facility extended to self-help group is not covered under the scheme


Non eligibile borrowersAny facility given on the basis of collateral

security or third party guarantee is disqualified for coverage under the scheme

The Trust also reserves the right to reject any application for the guarantee cover, if it deems necessary


Guarantee fees structure

Payable by MLI to the Trust up frontGuarantee fee to be payable within 30 days

from the date of first disbursement of the facility

Credits sanctioned up to Rs5lacs - 1%Credits sanctioned above Rs 5lacs to Rs

100lacs – 1.5%Credits sanctioned above Rs 5lacs to Rs

50lacs – in North Eastern region 0.75%


Annual Service fees structure

Payable by MLI to the TrustCredits sanctioned up to Rs5lacs - 0.5%Credits sanctioned above Rs 5lacs to Rs

100lakhs 0.75%ASF payable before 31st. May of the year.


Cost & Interest to the Borrower

Left to the discretion of MLI either to charge to the borrower or bear these fees by themselves

Interest rate payable by borrower: MLI shall follow the guideline issued by the RBI

Interest rate shall not exceed 3% over and above Prime lending rate excluding annual service fees

Primary security should be in the form of Business Assets. Minimum requirement of Net Assets (Assets-Liabilities) is 1.33 times the loan amount.


Composite all - in guarantee fee

Sr. No

Credit facility Annual Guarantee fee(AGF) {%}

Women, Micro Enterprises and units in North East Region

(incl. Sikkim)

Others

1 Upto Rs.5 lakh 0.75 1.00

2 Above Rs.5 lakhs and upto Rs.100 lakh

0.85 1.00


Amendment in October 2012

Exceptions to Third party guarantee obtained by MLI from:

Proprietor in case of sole proprietary concernPartners in the case of partnership firm/LLPTrustees in the case of TrustsKarta & coparceners in the case of HUFPromoters/Directors in the case of

Public/private limited Companies.


28/02/2013CGTMSE - IMC/ICSI-08.03.2013. SSK & Associates. 20

presented by. c.a suresh kumar subrahmanyan & associates office: 14 a/11. manish nagar j.p.road,...

Documents

guarantee fee cgtmse

sks associates

eligible credit facility

composite credit

extent of guarantee

introduction cgtmse

flow of credit

eligible mli