Ref. No. CGTMSE/03/177                                                              April 17, 2015

 

Member Lending Institutions of CGTMSE

 

Kind Attention : SME/Priority Sector Department

 

Circular No. 88/2015-16

Dear Sir,

 

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

 

            As you are aware, the Trust presently adopts non-discretionary approach in levying Guarantee Fee (GF)/Annual Service Fee (ASF)/Annual Guarantee Fee (AGF) without reference to the level of NPAs reported by the Member Lending Institutions (MLIs) on the CGTMSE portal vis-à-vis the guarantees issued to them.  Considering the high level of NPAs reported by some of the MLIs vis-a-vis the guarantees issued to them, it has now been decided to charge differential rates of ASF/AGF, depending upon the NPA levels reported by the MLIs.  The existing provision of the Scheme and the revised rate structure is as follows :

 


Existing Provision as per Clause 8 (i) and (ii) of Chapter III of Credit Guarantee Scheme (read with subsequent amendment vide CGTMSE circular No. 62/2012-13 dated October 10, 2012)

Proposed rate structure

Composite all-in Guarantee Fee as under :

Credit Guarantee

Annual Guarantee Fee [% p.a.]

 

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

Others

Up to ` 5 lakh

0.75

1.00

Above ` 5 lakh up to ` 100 lakh

0.85

1.00

of sanctioned credit facility shall be paid upfront to the Trust by the institution availing of the guarantee cover within such period as may be specified by the Trust.

In the event of non-payment of fee by the MLI within such period or any other specified date, the guarantee under the scheme shall not be available to the lending institution unless the Trust agrees for continuance of guarantee and the lending institution pays penal interest on the fee due and unpaid, with effect from the due date, at four per cent over Bank Rate, per annum, or at such rates specified by the Trust from time to time, for the period of delay.

The differential rates of ASF/AGF depending upon NPA levels of MLIs of the Trust are as follows :

Sr. No.

Annual Service Fee (ASF)/Annual Guarantee Fee (AGF)

NPA level of the MLI (%)

ASF/AGF (%)

1

Above 20%

SR + 100 bps

2

15% - 20%

SR + 50 bps

3

12% - 15%

SR + 25 bps

4

12% and below

SR

5

Below 6%

SR - 25 bps @

·      SR = Standard Rate (Existing ASF/AGF prescribed rate).

·      Changed rates are not applicable for credit facility up to ` 5 lakh.

·       NPA level of the MLI shall be  computed as a % of guarantees issued on and up to March 31 every year.

@ Provided MLI has been obtaining guarantee cover from the Trust for at least 5 complete years.

In the event of non-payment of fee by the MLI within such period or any other specified date, the guarantee under the scheme shall not be available to the lending institution unless the Trust agrees for continuance of guarantee and the lending institution pays penal interest on the fee due and unpaid, with effect from the due date, at four per cent over Bank Rate, per annum, or at such rates specified by the Trust from time to time, for the period of delay.

            The proposed revision shall be w.e.f. Guarantees approved by the Trust on or after July 01, 2015.  It is our objective to gradually move towards a risk based premia.  Further, it may please be noted that the Trust shall levy ASF/AGF as per the rate structure obtaining on all Guarantees live as on March 31, 2016 while issuing Demand Notices for ASF/AGF for FY 2016-17.

            We request you to kindly bring the contents of this Circular to the notice of your all offices.

Yours faithfully,

 

Sd/-

(S. S. Bakshee)

General Manager