presentation of cgtmse
TRANSCRIPT
Credit Guarantee Fund Trust forMicro and Small Entreprises
(CGTMSE)
Presentation on Credit Guarantee Scheme
Micro and Small Enterprises (MSE) in India
MSE is governed by the MSMED Act 2006
More than 26 million units Registered / Unregistered MSEs
Provide employment to more than 60 Million persons
Largest employment generating sector after agriculture
Employment potential at low capital cost
Constitute 95% of industrial units
Key contributors to national economy
45% of manufacturing output
40% of total exports
8% of Gross Domestic Product
Products of MSEs
Food products36%
Chemical & Chemical Products
22%
Basic Metal Industry
12%
Metal Products10%
Electrical & Machinery
Parts8%
Rubber & Plastics
Products6%
Others6%
More than 6000 products
CGTMSE Establishment & Corpus
Set up as a Trust in August, 2000 and administered by Board of Trustees
Government of India and Small Industries Development Bank of India (SIDBI) – the settlors – Contribution ratio 4 :1
Initial Corpus – Rs.125 crore ; Present Corpus – Rs.2158.79 crore ; Committed Corpus – Rs.2500 crore
Objectives of CGTMSE
Shift from collateral to merit based lending
Act as catalyst of entrepreneurship promotion
Facilitate institutional credit flow to MSE sector
Address growth constraints of MSE sector
Enable financial inclusion / employment generation
Revive confidence in credit guarantee mechanism
Micro & Small Enterprises as per MSMED Act eligible
Both Manufacturing and Service sectors covered
Credit Facility up to Rs.100 lakh covered
All fund / non-fund based facility covered
Maximum Cover of up to 85% of credit facility
All credit facility must be extended without any collateral security
Credit for retail trade, educational / training institutions and SHGs are not eligible for coverage.
Credit Guarantee Scheme (CGS)Salient Feature
Borrower Category
Maximum Guarantee Cover, where Credit facility is
Upto Rs.5lakhAbove
Rs.5lakh to Rs.50lakh
Above Rs.50lakh to Rs.100lakh
Micro Enterprises85% of the amount in default / Rs.4.25lakh
75% of amount in default / Rs.37.5lakh
Rs.37.50lakh plus 50%of amount in defaultabove Rs.50lakh /Rs.62.50lakh
Women Entrepreneur / units located in North Eastern Region (Incl. Sikkim)
80% of amount in Default / Rs.40 lakh
Rs.40lakh plus 50% ofamount in defaultabove Rs.50lakh /Rs.65lakh
All other category of borrowers
75% of amount in Default / Rs.37.5lakh
Rs.37.50lakh plus 50%of amount in defaultabove Rs.50lakh /Rs.62.50lakh
Extent of Guarantee cover
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS – Tenure of Cover
Tenure of Guarantee Cover for Term Credit, Combined WorkingCapital & Term Credit and Composite Credit is tenure of TermCredit / Composite Credit or loan termination date, whicheveris earlier
Where Working Capital facility alone is covered, the tenure isfor a block of five years or loan termination date, whichever isearlier. Thereafter, MLI should apply for renewal of GuaranteeCover
If tenure of Term Loan is 3 years, tenure of working capital willalso be 3 years. After 3 years, if guarantee cover is to becontinued for working capital, application for renewal to belodged online
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS – Application Lodgment
For credit facility sanctioned in a particular quarter, application forGuarantee Cover should be lodged by the end of the next quarter
In case of Working Capital Credit, date of renewal / review /enhancement can be taken as date of sanction
In case of credit facility secured by collateral, application can belodged after release of collateral, subject to time limits specified forapplication lodgment
Account should not have become overdue / bad / doubtful ofrecovery / adjusted for debts deemed bad or doubtful of recovery ason date of application / payment of guarantee fee
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS – Guarantee Fee
On approval of Guarantee Cover, Demand Advice for Guarantee Feeand is to be paid upfront for commencement of Guarantee Cover
In enhancement cases, Guarantee Fee is calculated on pro-rata basisfor residual tenure of guarantee
In case of working capital, payment is to be made within one monthfrom Demand Advice date and in case of term credit, one monthfrom date of first disbursement / demand advice date, whichever islater
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS – Annual Service Fee
Annual Service Fee (ASF) is to be paid for all accounts for whichGuarantee Cover has been availed / is in force in a financial year, atthe beginning of the next financial year i.e., ASF is collected in“arrears” and is calculated pro-rata for the first and last years.
If payment is not received within stipulated period, Guarantee Coverlapses and account is liable to be closed. Annual Service Fee is to bepaid till disbursement of first installment of claim
Present Service Fee rate is 0.50% of credit facility sanctioned forloans upto Rs.5 lakh and 0.75% of credit facility sanctioned for loansabove Rs.5 lakh
Facilitating Collateral-free Credit to Micro & Small Enterprises
Cost of Cover
Credit Facility
Upfront Guarantee FeeAnnual Service
Fee North East
Region(incl. Sikkim)
Others
Upto Rs.5 lakh 0.75% 1.00% 0.50%
Above Rs.5 lakh & upto Rs.50 lakh 0.75% 1.50% 0.75%
Above Rs.50 lakh & upto Rs.100 lakh 1.50% 1.50% 0.75%
Facilitating Collateral-free Credit to Micro & Small Enterprises
MLI is at their discretion may pass on the cost of Guarantee cover to the borrowers.
However, responsibility of payment of Guarantee / Service Fee to the Trust will be on MLIs
CGS – Handicraft Artisans
Guarantee Fee / Annual Service Fee in respect of credit facilitiessanctioned to artisans in the handicrafts sector and covered underthe Credit Guarantee Scheme are reimbursable by Office of DC(Handicrafts)
Disbursement date / amount to be indicated while entering thedetails to enable system to appropriate the fee
Guarantee Fee for eligible cases from April 01, 2009 is beingappropriated out of the fund.
For earlier cases, MLI’s may inform in writing to enableappropriation of Annual Service Fee out of the fund.
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS – Claim Settlement
Two stage claim settlement process
First installment of 75% of guaranteed portion of Amount in Defaultwill be paid within 30 days of receipt of complete information
Interest at prevailing Bank Rate will be paid in case of delay beyond30 days
Second installment shall be paid on conclusion of recoveryproceedings
On conclusion of recovery proceedings, final loss is shared byCGTMSE and MLI, in the ratio ranging from 85 : 15 to 62.5 : 37.5, asthe case may be
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS – Claim Settlement
Amount in Default - Outstanding in the account, both principal &interest, as on date of NPA or the date of lodgment of the claimapplication, whichever is lower, subject to maximum of amountguaranteed
Recoveries made after NPA date / payment of first installment ofclaim should be remitted to CGTMSE after deducting legalexpenses, if any
MLI’s may use OTS / Compromise settlement route for recovery.CGTMSE has to be informed if such settlement is negotiated
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS – Benefits
Credit Guarantee Scheme - A tool for
Widening of credit portfolio
Better management of risk
Faster recovery of dues
Enhancement of profitability
Facilitating Collateral-free Credit to Micro & Small Enterprises
Role of Credit Guarantee
A weak project cannot be turned into a viable one with guarantee
cover and is only an additional comfort to the lender, as is collateral
security
Banks should evaluate credit applications by using prudent
banking judgment / due diligence / business discretion in
supporting only viable projects under the Credit Guarantee
Scheme and conduct the account(s) of the borrowers with normal
banking prudence
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGTMSE Performance
YearNo. of Active MLIs
No. of Credit Facilities Approved
Amount of Guarantees Approved
(Rs. Crore)
Cumulative Guarantees Approved
(Rs. Crore)
FY 2000-01 9 951 6.06 6.06
FY 2001-02 16 2296 29.52 35.58
FY 2002-03 22 4955 58.67 94.25
FY 2003-04 29 6603 117.60 211.85
FY 2004-05 32 8451 267.46 538.62
FY 2005-06 36 16284 461.91 1000.53
FY 2006-07 40 27457 704.53 1705.06
FY 2007-08 47 30285 1055.84 2701.59
FY 2008-09 57 53708 2199.40 4824.34
FY 2009-10 85 150034 6875.11 11,559.61
FY 2010-11 106 254000 12589.22 23846.01
FY 2011-12 109 243981 13783.98 37139.31
FY 2012-13* 113 60008 3576.84 40559.00
As on June 30, 2012
CGTMSE Performance (Top 10 MLI’s)– as on June 30, 2012
MLI Proposals Approved Amount (in Rs. Lakh)
1 STATE BANK OF INDIA 166003 700926.93
2 BANK OF INDIA 96366 595564.02
3 PUNJAB NATIONAL BANK 89520 410442.44
4 CANARA BANK 63815 213545.80
5 INDIAN OVERSEAS BANK 56740 247825.80
6 ALLAHABAD BANK 37072 142692.27
7 UNION BANK OF INDIA 28662 107864.63
8 BANK OF BARODA 26631 216396.15
9 CENTRAL BANK OF INDIA 24462 156529.80
10 UNITED BANK OF INDIA 24046 97926.29
SNo.
CGTMSE Performance (Top 10 States)– as on June 30, 2012
SNo. State Name Proposals Approved Amount (in Rs.
Lakh)
1 UTTAR PRADESH 116557 432620.31
2 KERALA 81089 187852.32
3 WEST BENGAL 75242 301456.56
4 TAMILNADU 69984 318762.6
5 KARNATAKA 69190 342592.32
6 ORISSA 47885 189998.67
7 MAHARASHTRA 47042 408532.22
8 GUJARAT 42326 359221.13
9 RAJASTHAN 37577 141749.12
10 BIHAR 36771 138339.9
We welcome suggestions, advice andother inputs to improve our services
Contact us at :Credit Guarantee Fund Trust for Micro and
Small Enterprises7th Floor, MSME Development Centre
Plot No.C-11, ‘G’ BlockBandra Kurla Complex
Mumbai-400051Phone : 022-26541803-07, 61437800 (24 lines)
Fax : 022-26541821E-mail: [email protected] : www.cgtmse.in