Ref. No. CGTMSE/44/2365                                                              July 15, 2015



Member Lending Institutions of CGTMSE



Kind Attention: SME/Priority Sector Department



Circular No. 94/2015-16



Dear Madam/Sir,



Modifications in the Interest Rate Cap under Credit Guarantee Scheme (CGS) of CGTMSE



            We invite your attention to our Circular No. 71/2013-14 dated December 17, 2013 (copy available on our website, whereby modifications in Clause 5 (vi), Chapter-II of CGS was communicated to you whereby any credit facility sanctioned by MLIs under CGS, to eligible Borrowers with Interest Rate more than 4% over its Base Rate (BR) was made ineligible for coverage under CGS.

            It has now been decided to further reduce the cap on Interest Rate which could be charged by MLIs for CGTMSE covered proposals from up to 4% above base rate, as applicable presently, to up to 2% and 3% above Base Rate for loans up to ` 50 lakh and loans above ` 50 lakh respectively considering overall exposure of the borrower. It may be clarified here that in case of any enhancements of credit facility sanctioned under the revised guidelines of Base Rate plus 2% crosses ` 50 lakh, the cap of interest rate could be enhanced to 3% for the entire loans sanctioned and covered under CGS.

The revised guidelines shall be applicable for the credit facilities sanctioned by MLIs on or after September 01, 2015, including additional term loans for existing credit facilities covered under CGS. The revised guidelines shall, however, not be applicable for existing working capital cases already covered under CGS where enhancement and / or renewal takes place subsequent to September 01, 2015.

Needless to mention that any credit facilities sanctioned and proposed to be covered under CGS which is more than the cap of interest rate indicated above will not be eligible for coverage under CGS.  Further, in case of those MLIs for whom Reserve Bank of India has not enjoined Base Rate concept, the existing provision of CGS will continue excepting for Regional Rural Bank MLIs for which separate set of guidelines are being issued.

            The contents of the Circular may please be brought to the notice of all your offices.


Yours faithfully,



[S. S. Bakshee]

General Manager