Ref. No. CGTMSE/44/629                                                                             September 30, 2015         


Member Lending Institutions of CGTMSE



Kind Attention: SME/Priority Sector Department



Circular No. 97/2015-16



Dear Madam/Sir,



Modifications in the Interest Rate Cap under

Credit Guarantee Scheme (CGS) of CGTMSE



            Please refer to our Circular No. 94/2015-16 dated July 15, 2015 (available on our website) on the above subject.

Subsequent to operationalizing the revised guidelines w.e.f. September 01, 2015 as mentioned in the said Circular, we havebeen receiving representations from various Member Lending Institutions (MLIs) requesting CGTMSE for revisiting the revised guidelines communicated vide above referred Circular on the plea that the interest rate charged by the MLIs for MSE loans are normally within the range of 12.5% to 14.5% based on its internal rating model which would not be in compliance with the revised guidelines on interest rate cap. Many MLIs also felt that they may be allowed additional time say upto November 30, 2015 which would help them percolate the revised guidelines to their operating offices level to enable them to contract credit facilities in accordance with the revised guidelines on cap on interest rates.

It may be mentioned that while it may not be possible to revisit the revised guidelines which have been duly approved by the Ministry of MSME, Govt. of India after factoring all related issues, considering the difficulties expressed by the MLIs, it has been decided to defer the implementation of the revised interest rate guidelinesfrom present September 01, 2015 to December 01, 2015 i.e. the revised guidelines on interest rate cap shall now be applicable to the credit facilities sanctioned by MLIs on or after December 01, 2015.

The MLIs may re-apply the guarantee applications which have been rejected by CGTMSE in the interregnum based on the earlier effective date of September 01, 2015.

            The other contents of our Circular No. 94/2015-16 dated July 15, 2015 shall remain unchanged.

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


Yours faithfully,


[S. S. Bakshee]

General Manager