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Modified AGF Structure- Standard rate (SR)

 With a view to incentivize the borrowers with good repayment track record, AGF would be charged on the outstanding loan amount instead of guaranteed amount for credit facilities sanctioned / renewed to MSEs on or after April 01, 2018 as detailed below:

Credit Facility

Annual Guarantee Fee (AGF) [% p.a.]*

Women, Micro Enterprises and Units covered in North East Region

Others

Up to 5 Lakhs

1.00 + Risk Premium as per extant guidelines of the Trust

Above 5 Lakhs and up to 50 Lakhs

1.35 + Risk Premium as per extant guidelines of the Trust

1.50 + Risk Premium as per extant guidelines of the Trust

Above 50 Lakhs and up to 200 Lakhs

1.80 + Risk Premium as per extant guidelines of the Trust

 *AGF will be charged on the guaranteed amount for the first year and on the outstanding amount for the remaining tenure of the credit facility.

 

MSE Retail Trade Activity, the AGF will be charged at 2% of the guaranteed amount for the first year and on the outstanding amount for the remaining tenure of the credit facility. Differential pricing structure depending upon NPA / Claim payout ratio of the MLI will also be applicable on the AGF as per CGTMSE Circular No.107/2015-16 dated January 28, 2016.

Additional risk premium of 15% will be charged on the applicable rate to MLIs who exceed the pay-out threshold limit of 2 times more than thrice in last 5 years. This premium will be applicable for all guarantee accounts irrespective of the sanction date.

Charging of Annual Service Fee (ASF) / Annual Guarantee Fee (AGF) at differential rates depending upon NPA levels/ Claim Payout ratio of MLIs

 

Considering the very high level of NPAs reported by some of the MLIs as also significantly larger amount of claims settled for some of the MLIs, the Trust had introduced risk based pricing structure for cases sanctioned on or after April 01, 2016. The Trust had introduced following risk premium structure in place of existing guarantee fee structure:

 

(1) Risk premium on NPAs in

Guaranteed portfolio

(2) Risk premium on Claim

Payout Ratio

NPA Percentage

Risk Premium

Claim Payout

Risk Premium

 

 

Percentage

 

0-5%

SR

0-5%

SR

>5-10%

10% of SR

>5-10%

10% of SR

>10-15%

15% of SR

>10-15%

15% of SR

>15-20%

20% of SR

>15-20%

20% of SR

>20%

25% of SR

>20%

25% of SR

SR–Standard Rate

 

 

 

 

Annual Guarantee Fee (AGF)

Guarantee cover extended by CGTMSE for loans sanctioned on or after January 01, 2013 in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Guarantee Fee (AGF).

The demand on MLIs for Annual Guarantee Fee (AGF) in respect of fresh guarantees would be raised upon approval of guarantee cover. The AGF / guarantee cover would be valid for one year from the material date i.e. Guarantee start date. In the subsequent financial year in the month of April, demand for AGF (i.e. for 2nd AGF) would be raised for the guarantees approved in the previous financial year (till March 31st) for which the AGF has been received till March 31. Such demand would be w.e.f. the date on which previous AGF is expiring till March 31 of that year. The AGF demands for subsequent years would be on "Full Financial Year basis" excepting for the terminal year of guarantee where AGF demand would be till validity of guarantee cover.

Composite all-in Guarantee Fee as under:-




Credit Facility

Annual Guarantee Fee (AGF) [% p.a.]

Women, Micro Enterprises and units in North East Region (incl. Sikkim)

Others

Upto .5 lakh

0.75

1.00

Above .5 lakh and upto .200 lakh

0.85

1.00

Such AGF is to be paid by the MLI on or before two months from the demand date. The Trust reserves the right to revise the annual fee from time to time.

Annual Service Fee (ASF)

Guarantee cover extended by CGTMSE for loans sanctioned prior to January 01, 2013 in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 0.50% on the amount guaranteed for credit facilities upto .5 lakh and 0.75% on the amount guaranteed for credit facilities beyond .5 lakh and upto .100 lakh.

Cost to the borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Annual Guarantee Fee (AGF) to the borrower or alternatively they may decide to bear it themselves.  

Interest rate payable by borrower

"Any credit facility which has been sanctioned by the lending institution (all scheduled commercial banks, selected financial institutions) and NBFCs with the maximum interest rate not more than 14% p.a. and 18% p.a. respectively including cost of guarantee cover"

 

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