Ref. No. CGTMSE/44/255                                                                             April 28, 2015

Member Lending Institutions of CGTMSE

Kind Attention: Head, SME/Priority Sector Department

Circular No. 90/2015-16

Dear Sir/Madam,

Suspension of Guarantee Approvals under Credit Guarantee Scheme

                The position of NPAs marked by the Member Lending Institutions (MLIs) in the CGTMSE portal/claims settled as on December 31, 2014 was reviewed vis-à-vis the cumulative guarantees issued by the Trust to its MLIs upto that date.

            In the light of very high level of NPAs reported by some of the MLIs going upto more than 40% for certain MLIs, coupled with our highly leveraged Corpus, the Trust has decided to take certain remedial action. Towards this direction, it has been decided that no guarantees (includes fresh, renewals and enhancements) will be issued to MLIs which have marked cumulative NPAs (in terms of amount) of 10% or more vis-à-vis the cumulative amount of guarantees issued by the Trust to it. Such MLIs would be advised by the Trust separately giving them reasonable time to submit its eligible pending sanctions for guarantee approval. Further, if this NPA level crosses/has crossed the 12% mark, the claims of such MLIs will be settled after giving notice and after thorough scrutiny of each claim.

Incidentally, we reiterate that:

Ø  The MLIs should select good projects for coverage under the Credit Guarantee Scheme,

      Ø  No collateral security and/or third party guarantee to be taken  under any guise and

Ø  Proper appraisal and due diligence to be done of the credit proposals which are being submitted to the Trust for guarantee approval.

The revised guidelines shall be applicable with immediate effect.

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

Yours faithfully,

 

Sd/-

[S.S.Bakshee]

General Manager