There are many government-sponsored schemes for MSMEs and the CGTMSE is one of them. Learn more about this scheme here. CGTMSE introduced the Credit Guarantee Scheme (CGS) for Micro and Small Enterprises (MSEs) which guarantees credit facilities up to INR lakh on. The CGTMSE Scheme is an important schemes that every Indian Entrepreneurs and Business Owners must know about and understand. To start and manage a.
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Title and date of commencement. Guarantees by the Trust. Credit facilities eligible under the Scheme. Credit facilities not eligible under the Scheme. Agreement to be executed by the lending institution. Responsibilities of lending institution under the Scheme.
Guarantee Cgrmse and Annual Service Fee. Extent of the guarantee. Subrogation of rights and sceme on account of claims paid. Appropriation of amount received from the lending institutions. Appropriation of amount realised by the lending agency in respect of a credit facility after the guarantee has been invoked.
Trust’s liability to be terminated in certain cases.
Conditions imposed under the Scheme to be binding on the lending institution. Supplementary and general provisions. The Board of Trustees of Credit Guarantee Fund Trust for Cgtmss Industries, having decided to frame a Scheme for the purpose of providing guarantees to a substantial extent in respect of credit facilities to borrowers in Micro and Small Enterprises, hereby make the following Scheme: For the purposes of this Scheme.
Bank Guarantee, Letter of credit etc facilities extended by the lending institution to the eligible borrower. For the purpose of calculation of guarantee fee, the “credit facility extended” shall mean the amount of financial assistance committed by the lending institution to the borrower, whether disbursed or not.
For the purpose of the calculation of service fee, the credit facility extended shall mean the credit facilities both fund and non-fund based covered under CGS and for which guarantee fee has been paid, as at March 31, of the relevant year. The Trust may, on review of performance, remove any of the lending institution from the list of eligible institution. Subject to the other provisions of the Scheme, the Trust undertakes, in relation to credit facilities extended to an eligible borrower from time to time by an eligible institution which has entered into the necessary agreement for this purpose with the Trust, to provide a guarantee on account of the said credit facilities.
The Trust reserves the discretion to accept or reject any proposal referred by the lending institution which otherwise satisfies the norms of the Scheme. Credit facilities eligible under the Scheme: Provided that the lending institution applies for guarantee cover in respect of credit proposals sanctioned in the quarter April-June, July-September, October-December and January-March prior to expiry of the following quarter viz.
Provided further that, as on the material date. The following credit facilities shall not be eligible for being guaranteed under the Scheme: A lending institution shall not be entitled to a guarantee in respect of any eligible credit facility granted by it unless it has entered into an agreement with the Trust in such form as may be required by the Trust for covering by way of guarantee, under the Scheme all the eligible credit facilities granted by the lending institution, for which provision has been made in the Scheme.
Responsibilities of lending institution under the scheme: The lending institution shall exercise all the necessary precautions and maintain its recourse to the borrower for entire amount of credit facility owed by it and initiate such necessary actions for recovery of the outstanding amount, including such action as may be advised by the Trust.
The lending institution shall, in particular, refrain from any act of omission or commission, either before or subsequent to invocation cgtmsw guarantee, which may adversely affect the interest of the Trust as the guarantor.
In particular, the lending institution should intimate the Trust while entering into any compromise or arrangement, which may have effect of discharge or waiver of personal guarantee s or security.
The lending institution shall also ensure either through a stipulation in an schem with the borrower or otherwise, that it shall not create any charge on the security held in the account covered by the guarantee for the benefit of any account not covered by the guarantee, with itself or in favour of any other creditor s without intimating the Trust. Further the lending institution shall secure for the Trust or its appointed agency, through a stipulation in an agreement with the borrower or otherwise, the right to list the defaulted borrowers’ names and particulars on the Website of the Trust.
In the event of non-payment of annual service fee by May 31 of that year 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 service fee due and unpaid, with effect from the subsequent June 01, 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.
Any amount found to have been paid in excess would be refunded by the Trust.
In the event of any representation made by the lending institution in this regard, the Trust shall take a decision based on the available information with it and the clarifications received from the lending institution, and its decision shall be final and binding on the lending institution.
The Trust shall provide guarantee sheme under: Maximum extent of Guarantee where credit facility is. Sikkim other than credit facility upto Rs. All other category of borrowers. All proposals for sanction of guarantee approvals for credit facilities above Rs. Proposals approved by the MLIs on or after December 8, will be eligible for the coverage upto Rs. Where working capital alone is extended to the eligible borrower, the guarantee cover shall be for a period of 5 years or a block of 5 years, or for such period as may be specified by the trust in this behalf.
The guarantee in respect of that credit facility was in force at the time of account turning NPA. The amount due and payable to the lending institution in respect of the credit facility has not been paid and the dues have been classified by the lending institution cgmse Non Performing Assets. The credit facility has been recalled and the recovery proceedings have been initiated under due process of law. MLIs are advised to take further action as contained in Section 13 4 of the above Act wherein a secured creditor can take recourse to any one or more of the recovery measures out of the cgtme measures indicated therein before submitting claims for first installment of guaranteed amount.
In case the MLI is not in a position to take any of the action indicated in Section 13 4 of the aforesaid Act, they may initiate fresh recovery proceeding under any other applicable law and seek the claim for first installment from the Trust.
CGTMSE – Credit Guarantee Fund Trust for Micro and Small Enterprises
The Trust shall pay to the lending institution interest on the eligible claim amount at the prevailing Bank Rate for the period of delay beyond 30 days. The balance 25 per cent of the guaranteed amount will be paid on conclusion of recovery proceedings by the lending institution. On a claim being paid, the Trust shall be deemed to have been discharged from all its cgtmxe on account of the guarantee in force in respect of the borrower concerned.
The lending institution shall pay such penal interest, when demanded by the Trust, from the date of the initial release of the claim by the Trust to the date of refund of the claim. The Guarantee Cgtmsse received directly from the branches or offices other than respective operating offices of MLIs will not be entertained. The lending institution will hold lien on assets created out of the credit facility extended to the borrower, on its own behalf and on behalf of the Trust.
CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES (CGTMSE)
The Trust shall not exercise any subrogation rights and that the responsibility of the recovery of dues including takeover of assets, sale of assets, etc. The amount received schwme the lending institutions shall be appropriated in the order in which the service fee, penal interest and other charges have fallen due. If the service fee and the penal zcheme have fallen due on the same date, then the appropriation shall be made first towards service fee and then towards the penal interest and finally towards any other charges payable cgtme respect of the eligible credit facility.
Appropriation of amount realised by the lending institution in respect of a credit facility after the guarantee has been invoked.
Where subsequent to the Trust having released a sum to the lending institution towards the amount in default in accordance with the provisions contained in the Section 10 of this scheme, the lending institution recovers money subsequent to the recovery proceedings initiated by it, the same shall be deposited by the lending institution with the Trust, after adjusting towards the cost incurred by it for recovery of the amount.
However, notwithstanding the death or retirement of a partner where the borrower is a partnership firm or the death of one of the joint borrowers, if the lending institution is entitled to continue the credit facilities to the surviving partner or partners or the surviving borrower or borrowers, as the case may be and if the credit facilities have not already become non performing asset, the guarantee cgttmse respect of such credit facilities shall not to be deemed to be terminated as provided in this paragraph.
Every officer or other employee of the lending institution cghmse the borrower, who is in a position to do so, shall make available to the officers of the Trust scyeme SIDBI or the person appointed for the inspection as the case may be, the books zcheme account and other records and information which are in his possession.
If any question arises in regard to the interpretation of any of the provisions of the Scheme or of any directions or instructions or clarifications given in connection therewith, the decision of the Trust shall be final.
In respect of any matter not cgtmsd provided for in this Scheme, the Trust may make such supplementary or additional provisions or issue such instructions or clarifications as may be necessary for the purpose of the Scheme.
List Of Member Lending Instiutions. Scheme has ended on Dec 31