CGTMSE / (44) / 465                                                                                      May 13, 2009


All Member Lending Institutions of CGTMSE


Circular No. 52 / 2009 - 10


Dear Sir,

Development Commissioner (Handicrafts) [DC(Handicrafts)] -

Placement of Funds with CGTMSE


            Please refer to our Circular No.28/2005-06 dated October 21, 2005 regarding reimbursement of Guarantee Fee (GF) / Annual Service Fee (ASF) by the Office of DC (Handicrafts) in respect of the eligible credit facility extended to artisans in handicrafts sector by Member Lending Institutions (MLIs) and guaranteed under Credit Guarantee Scheme (CGS).  In order to facilitate increased flow of credit to the artisans in handicrafts sector and to obviate the need for seeking reimbursement of GF / ASF paid by MLIs for guaranteed accounts, the Office of DC (Handicrafts) has proposed to place advance funds every year with CGTMSE for 4 year period so that MLIs need not pay GF / ASF for credit facility extended by them to artisans in handicrafts sector.  The GF / ASF amount would be debited to this corpus by CGTMSE and guarantees issued / validated. 


2.         CGTMSE has received Rs.2.80 crore from the Office of DC (Handicrafts) in April 2009 for this purpose.  Necessary modifications have been made in the online GF / ASF module to enable MLIs to indicate that the GF / ASF has to be debited to this account.  However, if at any time during the year the amount in the corpus is exhausted, then GF / ASF will have to be paid by the MLI pending receipt of funds from the Office of DC (Handicrafts).


3.         All GF received for eligible cases from April 01, 2009 will be reimbursed from the DC (Handicrafts) corpus.  MLIs may please forward the details in this regard at the earliest.  As payment of GF is linked to date of disbursement of the credit facility by the MLI, you may indicate the date while entering the details in the online application for seeking guarantee cover.


4.         In respect of payment of ASF 2009, MLIs may indicate the details of units against which ASF 2009 payments have to be debited to the DC (Handicrafts) corpus for doing the needful.  In cases where payments for these accounts have already been received, the amount would be refunded in due course.  For eligible accounts which have been closed during FY 2009, the dates of closure may please be indicated to debit the pro-rata amount.


5.         Please bring the contents of this Circular to the notice of all the operating offices of your Bank / Institution.


            Kindly acknowledge receipt.

Yours faithfully,




[P M Radhakrishnan]

Deputy General Manager