CGTMSE/(  44 )/3330                                         June 10, 2014

 

All Member Lending Institutions of CGTMSE - Regional Rural Banks

Kind Attn.: Head, SME/Priority Sector Dept.

Madam /Dear Sir,

Review of Interest cap and other registration criteria of Regional Rural Banks (RRBs) as Member Lending Institutions (MLIs) of CGTMSE

 

As you are aware, revised registration criteria for re-registering Regional Rural Banks (RRBs) as Member Lending Institutions of CGTMSE was communicated to RRBs vide CGTMSE circular No. 72/2013-14 dated January 02, 2014 (available on www.cgtmse.in/circular). However, consequent upon feedback/representations received from various quarters, the above registration criteria was re-visited by the Trust. It has now been decided to relax some of the criteria as indicated in Annexure.

            Further, it has also been decided to approve the already applied online eligible guarantee proposals/applications pertaining to those RRBs which fit the revised norms indicated in the Annexure even if the applications would have become time barred in the context of extant guidelines of CGTMSE.  It has also been decided to approve the guarantees pertaining to other RRBs, on similar lines where guarantees have been applied by such RRBs prior to January 02, 2014. However, RRB concerned will have to confirm that respective guarantee proposals lodged by them in CGTMSE portal and which are pending for approval are standard assets and not stressed or rescheduled accounts and there are no overdues as on the date of confirmation.

            In the context of charging of interest rate by RRBs on the MSE loans / credit facilities proposed to be covered under Credit Guarantee Scheme (CGS), it has been decided to consider average base rate as on April 01 of every year of 5 largest commercial Banks by asset size in view of non-applicability of PLR/Base Rate concept to RRBs. However, we take very strong exception to the fact that the RRBs got themselves registered as MLIs of CGTMSE without disclosing that they do not have any PLR or Base Rate. Accordingly, only those credit facilities of eligible MLI-RRBs extended at the interest rate upto 4% (likely to undergo change) above the average base rate referred above shall be covered under CGS. The average base rate shall be advised by CGTMSE every year. The average base rate applicable for FY 13-14 (in respect of already lodged guarantee proposals upto March 31, 2014) and FY 2014-15 will be advised shortly. The fresh Undertaking to be given by RRBs at the time of registration as MLI of CGTMSE would be suitably amended at the time of re-registration with a view to capture the amendment on this account.

Please bring the contents of the letter to the notice of all your offices.

 

                                                                                                                                

Yours faithfully,

 

Encl: Annexure I                                                                                                     Sd/-

(S.S.Bakshee)

General Manager

        

 

   ANNEXURE

 

 

 

Sr. No.

Revised criteria

Relaxation in Revised Criteria

a.

The RRB should have been categorized as "Sustainably viable" or Currently viable"  by NABARD for it being enlisted as MLI of CGTMSE

All the RRBs, which are being / have been merged to form the new entity, should have been assessed by NABARD as "Sustainably Viable" or "Currently Viable" as per the latest available list prior to their merger.

b.

RRB should have a CRAR of not less than 12%.

Considering the minimum CRAR requirement of 9% stipulated for RRBs by RBI, the minimum CRAR requirement is reduced to 9% for registration purpose from present 12%. 

c.

1] Net Profit for at least the previous three financial years for all the RRBs getting merged.

 

 

 

2]  Net NPAs below 5 per cent of advances

1] No relaxation. Criteria retained.

 

 

 

 

 

 

 

2] No relaxation. Criteria retained.

 

d.

Composite rating score of 80 and above under NABARD's periodical rating review of RRBs.

All the RRBs acquiring 'A' rating (score of 75 and above) under NABARD composite rating model, as against present criteria of more than 80 marks, will be considered for registration. Further, wherever the assessment has not been completed by NABARD in respect of a newly merged entity, all the RRBs, which are being / have been merged to form the new entity should have scored "A" rating (as per the latest available rating) under NABARD's Composite Rating model prior to their merger, for consideration for registration.