CGTMSE / (44) /10859                                                                               January 7, 2009

 

All  Member Lending Institutions of CGTMSE

(All Scheduled Commercial Banks and Select FIs)

 

Circular No. 50 / 2008 - 09

Dear Sir,

Modification in the Credit Guarantee Scheme (CGS) -

Increase in ceiling of coverage

 

We are happy to inform that in terms of the Economic Stimulus Package announced by Government of India on December 07, 2008, it has been decided to increase the coverage of the eligible credit limit per borrower under the CGS from Rs.50 lakh to Rs.100 lakh extended by Scheduled Commercial Banks and select Financial Institutions to units in the MSE sector.

The consequential changes in the CGS are given below:

Chapter I - Clause 2 (v)

'Guarantee Cover' means maximum cover available per eligible borrower of the amount in default in respect of the credit facility extended by the lending institution.

 

Chapter II - Clause 4 (Para. 1)

Credit facility eligible under the Scheme:

The Trust shall cover credit facilities (Fund based and/or Non fund based) extended by Member Lending Institution(s) to a single eligible borrower in the Micro and Small Enterprises sector for credit facility (i) not exceeding Rs. 50 lakh (Regional Rural Banks/Financial Institutions) and (ii) not exceeding Rs.100 lakh (Scheduled Commercial Banks and select Financial Institutions) by way of term loan and/or working capital facilities on or after entering into an agreement with the Trust, without any collateral security and\or third party guarantees.

 

- 2 -

Chapter IV - Clause 9( Para. 1)

Extent of the guarantee:

The Trust shall provide guarantee as under :

Category

Maximum extent of Guarantee where credit facility is

Upto Rs.5 lakh

Above Rs.5 lakh upto Rs.50 lakh

Above Rs.50 lakh upto Rs.100 lakh

Micro Enterprises

80% /

Rs.4 lakh

75% /

Rs.37.50 lakh

Rs.37.50 lakh plus 50% of amount in default above Rs.50 lakh subject to overall ceiling of Rs.62.50 lakh

Women entrepreneurs/ Units located in North East Region (incl. Sikkim)

 

80% /

Rs.40 lakh

Rs.40 lakh plus 50% of amount in default above Rs.50 lakh subject to overall ceiling of Rs.65 lakh

All other category of borrowers

75% /

Rs.37.50 lakh

Rs.37.50 lakh plus 50% of amount in default above Rs.50 lakh subject to overall ceiling of Rs.62.50 lakh

2. All proposals for sanction of guarantee approvals for credit facilities above Rs. 50 lakh and upto Rs.100 lakh will have to be rated internally by the MLI and should be of investment grade. Proposals approved by the MLIs on or after December 8, 2008 will be eligible for the coverage upto Rs.100 lakh.

3. One time Guarantee Fee of 1.5% and Annual Service Fee of 0.75% will be applicable. All other terms and conditions of the CGS will remain unchanged.

You are requested to advise your operating offices (Zonal / Branch Offices) about the modification made to the Scheme as above. We solicit your cooperation in covering maximum proposals under the Scheme.

Please acknowledge receipt.

Yours faithfully,

 

Sd/-

[O.S.Vinod]

Chief Executive Officer