CGTSI/(44)

January 17, 2008

All Member Lending Institutions of CGTSI

Circular No. 42 / 2007-08

Dear Sir/Madam,

Micro and Small Enterprises Fund for North Eastern Region (NER)
- Guarantee cover for co-financing

Please refer to our Circular No. 04 / 2001-02 dated February 15, 2002 wherein the credit facility extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower, shall not be eligible for guarantee cover. On the recommendation of the Committee on Financial Sector Plan for North Eastern Region, SIDBI has created a fund viz. Micro and Small Enterprises (MSEs) Fund for North Eastern Region (NER) with an initial corpus of Rs. 10 crore. The corpus would be used by SIDBI to co-finance the project of MSEs in NER. It has been decided to extend coverage by CGTMSE in respect of the credit facility extended by SIDBI out of the MSE Fund for NER and the co-financing bank subject to the following conditions:

i) The modification of CGS would be applicable to units covered under SIDBI's proposed "Micro and Small Enterprises Fund for North East Region (NER)" of Rs. 10 crore under co-financing arrangement with banks for a maximum term credit facility of Rs.50 lakh.

ii) The co-financed cases shall be lodged for guarantee cover by the co-financing bank for the entire credit facility extended by both the co-financing bank and SIDBI.

iii) The co-financing bank shall ensure that all other norms of CGS have been complied with by SIDBI and the co-financing bank before lodging the application for guarantee cover with CGTMSE.

iV) The maintenance of guarantee cover i.e, payment of guarantee fee / service fee / lodgement of claim application, etc. shall be the responsibility of the co-financing bank.

V) The eligible claim amount shall be paid to the co-financing bank and it shall be the responsibility of the co-financing bank to share the claim proceeds with SIDBI.

2. All other terms and conditions of the Credit Guarantee Scheme shall remain unchanged. You are requested to advise your operating offices (Zonal / Branch offices) about the modification made to the Credit Guarantee Scheme in respect of the credit facility co-financed with SIDBI out of the MSE Fund for NE Region. Applications for the guarantee cover under the co-financing arrangement may be separately indicated by ticking the relevant check box in the online application form in CGTMSE's website.

Thanking you,



Yours faithfully,

Sd/-


(P.M.Radhakrishnan)

Deputy General Manager