CGTMSE / (44) /                                                                              November 05, 2009

                                                                     

All Member Lending Institutions of CGTMSE

Circular No. 57 / 2009 - 10

 Dear Sir,

Credit Guarantee Scheme (CGS) - procedure for

Invocation of guarantee and preferment of claim

Please refer to our Circular No.11/2003-04 dated July 03, 2003 on the above subject. As per the guidelines for preferment of claim under CGS, the Member Lending Institutions (MLIs) are required to inform the date on which the account was classified as NPA. It is observed that in many of the cases MLIs are not informing the Trust about the date of classification of the asset as NPA. The Trust is, therefore, not in a position to make provision in its books for these likely claims. It has also been observed that in many instances the date of NPA as per Reserve Bank of India (RBI) guidelines and that indicated in the application for claim are different. To avoid delays in settlement of claims, MLIs are requested to adhere to the norms prescribed by RBI for classification of the account as NPA.

2. To enable us to improve the claim settlement process further, it has been decided that the MLIs may henceforth indicate the date of classification of the account as NPA in a particular calendar quarter, by end of subsequent quarter using the following option in the online system.

(Member Login area à Guarantee Maintenance à Periodic Information à NPA Details )

3.In terms of modified provisions of CGS at point No. 9 of Circular No.56/2009-10 dated October 20, 2009 the MLIs are requested to lodge the applications for claim within a maximum period of one year from the date of NPA, if NPA is after the lock-in period or within one year of lock-in period, if the NPA is within lock-in period. However, for those cases which have become NPA before the date of above circular and MLIs have exceeded the permissible time period for lodging the claims, it has been decided to provide 3 months time to file the claim i.e., upto January 31, 2010 after which the claims will not be considered.

4.Please bring the contents of this Circular to the notice of all the operating offices of your Bank / Institution.

Kindly acknowledge receipt.

Yours faithfully,

Sd/-

(P. M. Radhakrishnan)

Deputy General Manager