presented by. c.a suresh kumar subrahmanyan & associates office: 14 a/11. manish nagar j.p.road,...
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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
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CGT-CREDIT GUARANTEE FUND TRUSTCGTMSE
Non – eligibilityGuarantee fees structureAnnual Service FeesCost & Interest to the BorrowerAmendment in October 2012Composite all - in guarantee fee
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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.
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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
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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
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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.
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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.
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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)
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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.
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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
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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
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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%
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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.
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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.
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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
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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.
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