1. Presented by. C.A Suresh Kumar Subrahmanyan & Associates Office: 14 A/11. Manish Nagar J.P.Road, Andheri (West) Mumbai 53. CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 128/02/2013

2. CGT-CREDIT GUARANTEE FUND TRUST CGTMSE  Introduction  Challenges faced by SMEs  Objective  Credit guarantee scheme  Eligible Lending Institutions  Risk coverage  Rehabilitation assistance  Eligible borrowers CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 2

3. CGT-CREDIT GUARANTEE FUND TRUST CGTMSE Non – eligibility Guarantee fees structure Annual Service Fees Cost & Interest to the Borrower Amendment in October 2012 Composite all - in guarantee fee CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 328/02/2013

4. Introduction - CGTMSE  Launched by Ministry of Micro, Small & Medium Enterprises  Guarantee given to Member Lending Institutions (MLI)  For loans sanctioned with out collateral security and/or third party guarantee.  Considering the financial requirements of SMEs & practical hurdles faced by them in raising finance.  CGT guarantees covers for loans sanctioned to a maximum amount of Rs. 100lacs including fund and non fund based finances given by MLI. CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 428/02/2013

5. Challenges faced by SMEs  Limited available Capital for SMEs  Sustaining through initial years  Difficulties in obtaining Finance from Banks and other lending institutions  Requirement of collateral securities  Requirement of third party guarantee CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 528/02/2013

6. OBJECTIVES OF CREDIT GUARANTEE FUND TRUST  Make available Collateral free Credit facility to SMEs  To strengthen Credit delivery system  To facilitate flow of Credit to SMEs  MLI to give importance for project viability  Secure credit facility purely on primary security of assets financed  MLI should endeavor to give composite credit to the borrowers CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 628/02/2013

7. Credit guarantee scheme  Available to eligible MLI  For any collateral / third party guarantee free loans extended to new as well as existing Micro & small enterprises  Maximum guarantee cover up to 100lacs.  Extent of guarantee cover up to 75/80/85% of Credit sanctioned  Time limit to apply for covering eligible credit facility sanctioned in one calendar quarter is before end of subsequent calendar quarter CGTMSE - IMC/ICSI-08.03.2013. SSK & Associates. 728/02/2013

8. Eligible Lending Institutions  All scheduled commercial Banks  Specified Regional Rural Banks  NSIC, NEDFI, SIDBI which have entered into an agreement with the trust for the purpose  Eligible lending institutions to enter in to agreement & become eligible Member Lending Institutions (MLI) CGTMSE - IMC/ICSI-08.03.2013. SSK & Associates. 828/02/2013

9. Maximum Risk coverage Up to 75 % (85% for select category of borrowers) of the defaulted principal amount in respect of term loans including interest for one quarter Outstanding working capital advance including interest Time limit - As on the date of becoming NPA or as on date of filing suit which ever is lower. Non qualifying amounts – Penal interest, Service charge, commitment charge or any other levies/ charges. CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 928/02/2013

10. Rehabilitation Assistance For the unit covered under CGTMSE and becoming sick due to factors beyond the control of management, assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit cap of Rs.100 lakhs. CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 1028/02/2013

11. Eligible borrowers New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding 'Retail Trade'. Loans sanctioned to all activities that come under service sector as per RBI's guidelines on 'Lending to Priority Sector' and MSMED Act 2006, except retail trade are eligible for coverage under the scheme. Loans given to small road & water transporters Mandatory to have Income tax Permanent Account Number (PAN) CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 1128/02/2013

12. Eligible borrowers(contd) Additional Credit facilities sanctioned to existing units can be covered provided no collateral/ third party guarantee is obtained Where part of credit is covered with collateral and part of facility without collateral security is not eligible if it is of composite in nature. Credit facilities allowed to eligible borrower can be from various institutions subject to ceiling of 100lakhs per borrower and subject to maximum eligible amount of the MLI. CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 1228/02/2013

13. Eligible borrowers(contd) Co-financing to a MSE unit by Financial Institution with a Commercial Bank is also covered under the Scheme Presently credit facility extended to self-help group is not covered under the scheme CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 1328/02/2013

14. Non eligibile borrowers Any facility given on the basis of collateral security or third party guarantee is disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover, if it deems necessary CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 1428/02/2013

15. Guarantee fees structure Payable by MLI to the Trust up front Guarantee fee to be payable within 30 days from the date of first disbursement of the facility Credits sanctioned up to Rs5lacs - 1% Credits sanctioned above Rs 5lacs to Rs 100lacs – 1.5% Credits sanctioned above Rs 5lacs to Rs 50lacs – in North Eastern region 0.75% CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 1528/02/2013

16. Annual Service fees structure Payable by MLI to the Trust Credits sanctioned up to Rs5lacs - 0.5% Credits sanctioned above Rs 5lacs to Rs 100lakhs 0.75% ASF payable before 31 st. May of the year. CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 1628/02/2013

17. Cost & Interest to the Borrower Left to the discretion of MLI either to charge to the borrower or bear these fees by themselves Interest rate payable by borrower: MLI shall follow the guideline issued by the RBI Interest rate shall not exceed 3% over and above Prime lending rate excluding annual service fees Primary security should be in the form of Business Assets. Minimum requirement of Net Assets (Assets- Liabilities) is 1.33 times the loan amount. CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 1728/02/2013

18. Composite all - in guarantee fee Sr. No Credit facilityAnnual Guarantee fee(AGF) {%} Women, Micro Enterprises and units in North East Region (incl. Sikkim) Others 1Upto Rs.5 lakh0.751.00 2Above Rs.5 lakhs and upto Rs.100 lakh 0.851.00 CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 1828/02/2013

19. Amendment in October 2012 Exceptions to Third party guarantee obtained by MLI from: Proprietor in case of sole proprietary concern Partners in the case of partnership firm/LLP Trustees in the case of Trusts Karta & coparceners in the case of HUF Promoters/Directors in the case of Public/private limited Companies. CGTMSE - IMC/ICSI-08.03.2013. SKS & Associates. 1928/02/2013

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