Ref.No. CGTMSE/44/2366                                                              July 15, 2015



All the Regional Rural Bank Member Lending Institutions of CGTMSE



Kind Attention: MSE Department


Circular No. 95/2015-16



Dear Madam/Sir,



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


            We invite your attention to our Circular No. 80/2014-15 dated July 16, 2014 (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 MLI - RRBs under CGS, to eligible Borrowers with Interest Rate more than 4% over applicable Average Base Rate (ABR) 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 MLI - RRBs for CGTMSE covered proposals from up to 4% above ABR, as applicable presently, to up to 2%  above ABR for loans up to ` 50 lakh   considering overall exposure of the borrower.Please note that the ABR of 10.14% p.a. for the FY 2014-15,advised to you earlier, would remain valid for the credit proposals sanctioned in FY 2015-16 and proposed to be covered under CGS,  till the ABR for subsequent FY is advised to MLI-RRBs by CGTMSE.  

The revised guidelines shall be applicable forthe credit facilities sanctioned by MLI - RRBson 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. 

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


Yours faithfully,



[S. S. Bakshee]

General Manager