Queries raised by MLIs

CGTSI's Clarifications

Whether debits of Term Loan interest to Working Capital (OCC/OD) / Current A/c should be excluded at the time of settlement of guarantee claim,

(i). Even though payment of such interest has been duly paid by the party through subsequent credits / remittances.

(ii). If such interest debits are not recovered from the party but the liability under WC(OCC/OD) a/c is well within the sanctioned limit.

Since interest on term loan is not covered under the Credit Guarantee Scheme and no annual service fee is payable by the MLIs, under both the situations indicated against Points (i) and (ii), the interest on term loan debited to WC (OCC / OD) a/c has to be excluded from the outstanding balances in the WC (OCC/OD) a/c while invoking the guarantee and lodging the guarantee claim with the Trust.

Whether such debits of Term Loan interest should be excluded from the total WC (OCC/OD) liability while paying annual service fee, if the guarantee cover is not available on this interest component.

Yes

MLIs have suggested that the interest on TL debited to WC (OCC/OD) a/c s (covered under the Guarantee scheme) should also be extended guarantee cover irrespective of recovery / non-recovery of such interest debits subject to the liability being within the sanctioned limit of WC (OD/OCC) accounts.

Proposed suggestion, being not in line with the present provisions of the Credit Guarantee Scheme, is not acceptable.