CGTMSE / (44)/1946

March 03, 2008

All Member Lending Institutions of CGTSI  

Circular No. 45 / 2007- 08

Dear Sir/Madam,  

 

Credit Guarantee Scheme (CGS)

- Modification in Guarantee Fee(GF) and Annual service Fee (ASF) structure

 

         Please refer to our Circulars No. 21 /2004-05 dated January 20, 2005 regarding modifications in CGS and 31 / 2006-07 dated April 20, 2006 on changes in Guarantee Fee Structure. Consequent upon the announcement of reduction in GF/ASF made by the Hon'ble Union Finance Minister, Government of India, in the Parliament on February 29, 2008 while presenting the Union Budget for FY 2008-09, it has been decided to modify the GF/ASF structure in respect of credit facility upto Rs. 5 Lakh sanctioned by MLIs. Though the budget proposals are made effective from April 01st of the subsequent year, it has been decided to extend the benefit of reduced GF/ASF to the Micro and Small Enterprises (MSEs) sector during the current FY itself. Accordingly, the reduction in GF will be effective from March 01, 2008 and the ASF for FY 2008 will be charged at the reduced rate. Consequently, the Chapter III - Clause 8 (i) and (ii) relating to GF/ASF of CGS has been partly modified as under:

         Chapter III - Clause 8 (i) and (ii)

         8 (i) A one time guarantee fee at specified rate (currently 1.00% in the case of credit facility upto Rs. 5 Lakh and 1.5% in the case of credit facility above Rs. 5 Lakh) of the credit facility sanctioned (comprising term loan and / or working capital facility ) shall be paid upfront to the Trust by the institution availing of the guarantee within 30 days from the date of first disbursement of credit facility.

         8 (ii) The annual service fee at specified rate (currently 0.50% in the case of credit facility upto Rs. 5 Lakh and 0.75% in the case of credit facility above Rs. 5 Lakh) of the credit facility sanctioned (comprising term loan and / or working capital facility) shall be paid by the lending institution within 60 days ie. on or before May 31, of every year.    

         2. All other terms and conditions of the scheme remain unchanged. Please bring the contents of the circular to the notice of the operating offices (Zonal / Branch Offices) of your Bank/ Institution.

         3.Kindly Acknowledge receipt.

         Thanking you,

 Yours faithfully,

Sd/- 

 (P.M.Radhakrishnan)

Deputy General Manager