April 09, 2003

The Operating Offices of Member Lending Institutions

Circular No. 10/ 2003-04

Dear Sir / Madam,

Payment of Annual Service Fee On accounts guaranteed by CGTSI

As you are aware, the guarantee cover in respect of your borrower accounts stands issued on the date of receipt of Guarantee Fee by CGTSI. In order to keep the guarantee cover issued by CGTSI in force, you are required to pay the Annual Service Fee @ 1% p.a on the outstanding amount to the debit of the borrower's accounts as on March 31 each year, latest by May 31 of every year. It may be noted that the annual service fee is payable by MLIs in respect of all borrower accounts guaranteed by CGTSI till settlement of claim. In respect of all those borrower accounts against which CGTSI guarantee cover stands issued and alive , you may please pay the service fee @ 1% p.a. on the outstanding credit extended by you to each of the borrower account as on March 31, 2003, latest by May 31, 2003 .

In the event of non-payment of annual service fee by May 31, 2003, the MLIs are required to pay penal interest on the service fee due and unpaid, w.e.f. June 01, 2003 at 4% over Bank Rate (currently 6.25% p.a.) for the period of delay. The last date for payment of service fee with stipulated penal interest is July 31, 2003, thereafter CGTSI would not accept the service fee (even with penalty) and the guarantee cover issued against such borrower accounts would stand cancelled.

In order to facilitate calculation of annual service fee payable by you, CGTSI has developed a software programme. The Service fee Software Programme is available on the Trust's website at and the same can be accessed by using Member Id, User Id and Password of Nodal officer or Operating officer. The detailed procedure for use of "Service Fee Software Programme" is as indicated in the Annexure. The software is user-friendly. The service fee payable would automatically get calculated on filling in the outstanding credit in respect of each of the borrower account.

Please remit the service fee to us directly by way of Demand Draft drawn in favour of " Credit Guarantee Fund Trust for Small Industries " or " CGTSI " payable at Mumbai giving particulars of Member ID of the Operating Office, CGPANs against which the service fee has been paid.

Should you need any clarification, please feel free to get in touch with Shri S. N. Sadhwani, Deputy General Manager through e-mail

Thanking you,

Yours faithfully,

Sd /-

(N. Venkatasubramanyan)

Chief Executive Officer